The Grossman Model of Demand for Health: Part 1/3

[@zhidizhang7235]

Thank you so much for uploading these videos. They help me a lot in understanding the Grossman model. But 2 Qs are wondering if you could help me out: 1, for the 5:27 part "Taking out derivative with respect to It-1", why was there no sum for PtMt (t-n)? 2. Why was there only one left time lost in time constraints?

[@EconJohnTutor]

To address both your questions: 1)P_tM_t has no sum because M_t is only impacted by the current period I_t change. 2) The change in I_(t-1) only impacts your time lost due to illness.

[@zhidizhang7235]

Also, would you mind explaining more about the 6:37 part, "subtracting (2) from (1)?"

[@EconJohnTutor]

This is just a trick of solving this problem with first order conditions. I like the continuous time version of the Grossman model better because you of this tediousness with the discrete time version of the model.

[@zhidizhang7235]

@@EconJohnTutor Thank you so much!!! Appreciate your replies~ I've got a better understanding of the M_t and I_t definitions! Best wishes~

[@chiragraju821]

Nice

[@Septumsempra8818]

How does one contact EconJohn?

[@EconJohnTutor]

Email in about section on channel!