The Grossman model suggests that individuals can produce health through different inputs, such as medical care, diet, and exercise, and that the efficiency of these inputs varies across individuals so if the shadow price of one input, such as medical care, increases, would individuals substitute toward other inputs such as preventive care? Basically are these inputs like substitue products? How can we then determine which combination of health inputs produces health most efficiently?
How does an increase in the shadow price of health affect how individuals substitute between different health inputs in their health production function?
by Gianna Ishema -
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