Lecture Activity Objective:  Define Health Economics

 

Part 1:  The Demand for Health Care

 

  1. Many lay people would define economics as the study of supply and demand.   Write your definition of economics?  Briefly compare the two definitions?

 

 

 

 

 

 

 

  1. Answer the following questions regarding the demand for seeking medical services.

 

(a)    Would you expect the law of demand to hold?

 

 

 

 

(b)    What would you predict about the price elasticity of demand for medical services in general (at the margin)?  Explain your answer. 

 

 

 

 

(c)    Can you think of a commodity within the market for medical services where the price elasticity of demand would be elastic?  Inelastic?  Explain.

 

 

 

 

 

(d)    If you were writing a utility function for a consumer in need of a heart transplant surgery, what would enter the individual’s utility function and how?

 

 

 

 

  1. Assume the above demand curve represents the demand of an individual for a particular medical service.  Give an interpretation of the points along this demand curve.  For example, write a sentence describing the relationship between price and quantity when Q=3 for this individual.

 

 

 

 

 

 

 

  1. The consumer problem revisited:

(a)    Where do the price/quantity combinations come from for an individual?

 

 

 

 

 

(b)    List the assumptions necessary to solve the consumer’s problem for optimal choices given constraints? 

 

 

 

 

 

 

 

 

(c)    How valid are each of these assumptions in the market for health services?  Explain briefly.

 

 

 

 

 

 

 

 

 

Part 2:  Supply

 

  1. Who are the suppliers of medical services?

 

 

 

 

 

  1. What determines the production levels and price?