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Health Economics

ملتقى الجودة وسلامة المرضى
موضوع مغلق
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قديم 07-08-2011, 09:21 PM
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تحسين الآداء will become famous soon enough


WHAT IS ECONOMICS
social science that studies the production, distribution, trade and consumption of goods and services.
normative applies subjective value judgments
positive objectively prediction and explainations of consequences of choices, given a set of assumptions and/or a set of observations.

FUNDAMENTAL ECONOMIC PROBLEM
SCARCITY
resources are scarce, or at least limited, and that not all human needs and desires can be met. How to distribute these resources in the most efficient and equitable way is a principal concern of economists.

Microeconomics Agents
Consumer’s objective is Utility Maximization
Consumption of goods and services provides utility (satisfaction)
Consumer Demand
Producer’s Objective is Profit Maximization
Production of goods and services provides revenue
Total Revenue-Total Cost =Profit
Supply of goods and services
Markets
Where forces of supply and demand meet and prices are determined.
Equilibrium price = clears the market, i.e. quantities demanded = quantities supplied
Equilibrium quantity
Definitions
Demand is the amount of a good or service that consumers are willing and able to buy at a given price.
Utility is the satisfaction people get from consuming (using) a good or a service
Supply is the amount of a good or service that producers are willing and able to sell at a given price.
The price where the amount consumers want to buy equals the amount producers are prepared to sell is the equilibrium market price and the q

Substitution and Income Effects
Two things happen when price changes
substitution effect
a decrease in the price of physician services causes the consumer to substitute away from relatively higher priced goods and services and purchase more physician services
income effect
a lower price means an increase in purchasing power and the consumer will purchase more of all normal goods
The Demand for Medical Care
The demand for medical care is a derived demand
depends on the demand for good health
Price is not the only determinant of demand
other economic and noneconomic variables can alter the position of the demand curve
Other Economic Demand-Side Factors
Income (+ relationship)
medical care is generally assumed to be a normal good
Prices of other goods
complements (– relationship)
substitutes (+ relationship)
Time Costs (– relationship)
Factors Influencing Demand
The amount of a good demanded depends on:
the price of the good (-) ;
the income of consumers (+ for normal, - for inferior)
the demand for alternative goods which could be used (substitutes) (+);
the demand for goods used at the same time (complements) (-);
whether people like the good (consumertaste).
Expectations (prices, incomes)
Information
Number of Buyers
Utility Maximization Mathematically
max u(X; Y) (1)
subject to : pxX + pyY = M (2)
Lagrangean approach transforms a constrained optimization problem into an unconstrained problem of choosing x, y, and the Lagrange multiplier;
maximize L = u(X; Y) + λ[M - pxX - pyY] (3)
Utility Maximization Mathematically
Differentiating L with respect to x, y, and λ, and setting the derivatives equal to zero, the resulting first order conditions are:
Utility Maximization Mathematically
The solution to utility maximization problem gives the consumer's choice of X and Y, as a function of prices and income, which we denote by
X* = f(px; py;M)
Y* = f( px; py;M)
These are known as the generalized demand functions.
The Utility-Maximizing Rule
Mathematically it can be shown that consumer utility is maximized when the marginal utility gained from the last dollar spent on each product is equal across all goods and services purchased
known as the utility-maximizing rule
The Utility-Maximizing Rule
Suppose that the equation does not hold
The Law of Demand
Suppose that the price of physician services (Px) rises
This means that

Therefore, an increase in the price of physician services will lead to a reduction in the quantity of physician services demanded
this inverse relationship between price and quantity demanded is known as the law of demand
The Law of Demand
••The Law of Demand
Two things happen when price changes
substitution effect
a decrease in the price of physician services causes the consumer to substitute away from relatively higher priced goods and services and purchase more physician services
income effect
a lower price means an increase in purchasing power and the consumer will purchase more of all normal goods
The Demand for Medical Care
The demand for medical care is a derived demand
depends on the demand for good health
Price is not the only determinant of demand
other economic and noneconomic variables can alter the position of the demand curve
Production – supply side
We will study producer behavior
Remember the producer’s objective ….

Profit Maximization
Profit is Total Revenue – Total Cost
The Demand for Medical Care
Economic theory indicates that the demand function should look something like this:

The Demand for Medical Care
A change in the price of medical services generates a change in quantity demanded
represented by a movement along the demand curve
A change in any other determinant causes a change in demand
represented by a shift in the demand curve
The Market Demand for Health Care
The market demand for medical care equals the total demand by all consumers in a given market
found by horizontally summing the individual demand curves
is downward sloping like individual demand curves
same factors that shift individual demand curves also shift the market demand
the number of consumers also shifts market demand
The Market Demand for Health Care
The development of the market demand curve allows us to distinguish between the intensive and extensive margins
the intensive margin refers to how much more or less of a product consumers buy when its price changes
the extensive margin captures how many more or fewer people buy a product when its price changes
The Fuzzy Demand Curve
In reality, the market demand curve for medical care is not a well-defined line
the demand for medical care is a derived demand
the relation between medical care and health is not exact
consumers do not have complete information
The Fuzzy Demand Curve
Therefore, the relation between price and quantity demanded is “fuzzy”
for a given price, we may observe some variation in the quantity or types of services demanded
for a given quantity or type of medical service, we may see some variation in price
The Fuzzy Demand Curve
In the second factor outlined above, we saw that if price increases while income stays the same, demand will decrease. It follows, then, that if there is an increase in income, demand tends to increase as well. The degree to which an increase in income will cause an increase in demand is called income elasticity of demand, which can be expressed in the following equation:
Utility function is as follows:
U = f(x1, x2,...xn)
means that items x1, x2, etc. to some nth x all contribute to a person's utility.

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من مواضيعي : تحسين الآداء
موضوع مغلق

مواقع النشر (المفضلة)

الكلمات الدليلية (Tags)
economics, health


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