Health Economics

1. How is Economics defined?

2. Why is the understanding of economics important to healthcare policy and law?

3. Explain these concepts:

a. Rational decision making

b. Utility

c. Diminishing marginal utility

4. What is economic demand?

5. How do these factors each influence demand?

a. Income

b. Quality

c. Price of a substitute

d. Price of a complement

6. See Box 9.2. Do you support theory x or y as it relates to healthcare? How might your position affect how you see the government role in healthcare?

7. What is elasticity and how might it be important in health economics?

8. What is the difference between average and marginal cost? Use an example if needed to explain.

9. What is supplier-induced demand? How might physicians induce demand in a fee for services reimbursement system?

10. Is the healthcare market perfectly competitive? If we allow the “free market” to operate without any interference from government will everyone be able to purchase healthcare?

11. Describe monopolistic competition.

12. What is market failure?

13. Is lack of income equity a market failure?

14. What is a public good or an externality? How do these affect the market and economy?

15. What role does government have in the healthcare market?

16. Give examples of:

a. Government financing public goods

b. Tax increases, tax deductions, and tax subsidies

c. Regulatory mandates

d. Prohibitions

e. Redistribution of income