Health Economics And Policy International Edition 4th Edition By James W. Henderson – Test Bank

Health Economics And Policy International Edition 4th Edition By James W. Henderson – Test Bank

Chapter 2: Using Economics to Study Health Care Issues

This chapter introduces the basic economics model of supply and demand and examines its use in the study of health care issues.  A discussion of the principles of optimizing behavior sets the stage for the development of the model of demand and supply.  A discussion of the theory of the firm follows, contrasting perfect and imperfect competition.  Supply- and demand-side imperfections are also discussed.

Chapter Outline

1. The relevance of economics in health care
2. Critical assumptions in economics
3. The scientific method
4. Model building
5. Problem solving
6. Marginal analysis
7. Economic optimization
8. Demand and supply
9. The law of demand
10. Price elasticity of demand
11. The law of supply
12. Equilibrium
13. The competitive model
14. Theory of firm behavior
15. Price Ceilings and Price Floors
16. The Impact of an Excise Tax
17. Welfare implications
18. a) Consumer surplus
19. b) Producer surplus
20. Imperfect competition
21. Supply-side imperfections
22. Demand-side imperfections
23. Summary and conclusions

Profile: Kenneth J. Arrow

Chapter Objectives

1. Explain the use of economics as a framework for studying health care issues.
2. Understand the limits of economics in explaining behavior in medical care markets.
3. Recognize the importance of incentives in explaining individual behavior.
4. Examine the basic economic model of demand and supply, including the concepts of equilibrium and elasticity.
5. Understand and apply the model of firm behavior in medical markets.