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| Greek meaning of economics |
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Definition
| One who manages a household |
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Definition
| The study of how society manages scarce resources. |
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Definition
| Focuse on behavior of individuals and firms. |
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| Focuses on how the economy works as whole. |
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| What four principles indicate how people make decisions? |
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Definition
- People face trade offs
- Opportunity cost
- Rational thinkers make marginal decisions
- Incentives
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Term
| What economic principles explain how people interact? |
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Definition
- Trade offs makes everyone better off
- Markets are a good way of organizing economic acitivity.
- Governments can help when markets fail.
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| What economic principles explain how the economy works as a whole |
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Definition
- A country's standard of living depends on productivity.
- More printed money more inflation.
- Phillips curve: inflation vs unemployment.
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Definition
| This has to do with choosing between efficeny and equity. |
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| This is making the most out of scarce resources. |
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| Distributioon of resources fairly |
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| The cost of something is what you give up. |
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Definition
the supply and demand of health care resources and their impact on a population |
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| How does trade make everyone better off? |
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Definition
- Allows specialization
- This makes the pie bigger aka efficiency.
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Term
| When are governments needed to improve the market? |
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Definition
| When there is a market failure. |
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Term
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Definition
| Inefficient allocation of resources |
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Term
| What two things lead to market failures and describe them |
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Definition
Externalities: Impact on person's action on bystanders well being.
Monopoly: One person runs the market. |
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Term
| What are prices and what do they do? |
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Definition
- reflect value to customer and cost of production.
- help guide decisions that optimize social welfare.
- communicates a lot of information effciently.
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Term
| What is the disadvantage of the government interfering with prices? |
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Definition
| It affects society's ability to maximize welfare and creates noise around pricing. |
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Definition
| handicapped by lack of information |
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Term
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Definition
| A group of buyers and sellers of a particular good or service |
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Definition
Market where there are many buyers and sellers and each has negligible impact on the society.
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Term
| Assumptions of a perfectly competitive market |
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Definition
- Many buyers and sellers with negligible impact
- Homogenous goods
- No barriers to entry
- Prices are flexible so it can go up or down.
- Perfect buyer and seller information
- No externalities
- Normal profits in the Long Run
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Term
| What is a monopolically competitive market |
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Definition
| One that has different goods and different sellers. |
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Term
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Definition
- Price
- Income
- Taste
- Expectation
- Related goods
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Term
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Definition
| These are goods that increase in demand when income reduces. For example riding a bus vs. buying a car. |
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Definition
- Reduction in the price of a substitute can lead to reduction in demad of a good. frozen yoghurt vs. Ice cream
- Reduction in demand of a complimentary good can result in increase in demand for a good. e.g. hot fudge and ice cream.
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Term
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Definition
| The sum of all individual demands for a particular good and service. |
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Term
| What indicators can cause a shift in the market demand curve |
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Definition
| other determinants of demand except price, but including number of buyers can shift the curve. |
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Term
| How does the Law of Supply make sense? |
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Definition
| As the price increases more goods are produced because it is profitable to produce at a higher price. |
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Term
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Definition
- Price
- Input price (or input cost)
- Technology
- Expectations
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Term
| What indicators shift the market supply curve |
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Definition
Any determinant of supply excluding price, but including number of sellers. |
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Definition
| At a given price the quantity of supply excceds the quantity of demand. |
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Definition
| At a given price the quantity demanded exceeds the quantity supplied. Shortage exist here. |
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Term
| In free markets shortages and surpluses are temporary, why? |
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Definition
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Term
| What is the law of supply and demand? |
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Definition
| This is the claim that prices of any good adjust to bring the supply and demand for that good into balance. |
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Term
Difference between SUPPLY and QUANTITY SUPPLIED:
What is supply? |
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Definition
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Term
Difference between SUPPLY and QUANTITY SUPPLIED:
What is quantity supplied? |
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Definition
| the ammount the suppliers wish to sell. |
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Definition
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Term
| What does willingness-to-pay represent? |
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Definition
| represents value or benefit of each unit. |
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Term
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Definition
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Term
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Definition
| the market rationing mechanism. |
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Term
| What does perfect buyer and seller information mean? |
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Definition
- Nature of product is known
- True price is known
- There is no time delay: all relevant information is known at the point of purchase or sale.
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Term
| Normal profits in the Long Run |
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Definition
| No incentives exists for sellers to enter the market. |
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Term
| Why is equilibirum point a good reference point? |
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Definition
- It is efficient because it provides the most for the given input and allows production output at least cost.
- Maximizes social welfare
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Term
| Four basic question of health economics |
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Definition
- What mix of medical and non medical goods and services should be produced?
- What mix of medical goods and services should be produce.
- What specific resources should be used to produce does medical goods and services?
- Who should recieve the medical goods and services that are produced?
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Term
| Which of the four basic question speak to allocative efficiency? |
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Definition
| Mix of medical and non medical goods and services and Mix of medical goods ans services. |
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Term
| Which of the four basic question speak to production efficiency? |
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Definition
| What resources are needed to make medical goods and serces? aka should it be capital intesive or labour intesive. |
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Term
| Production Possibilities Curve (PPC). What does it illustrate? |
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Definition
| production and allocative efficiency |
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Term
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Definition
| is represented on each point of the PPC. it means that all health resources are fully utilitized. They are neither under employed or unemployed. Resources are used in the most reproductive manner so that the society gets their maximum use. |
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Term
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Definition
| Ammount of health resources and technology are fixed. |
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Term
| Law of increasing opportunity cost |
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Definition
| the opportunity cost of an activity increases as more of that activity is undertaken. |
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Definition
| This is attained when society chooses the best or most preffered PPC point. |
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Term
| Pure market system means what and is where relative to the PPC curve |
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Definition
| Goods and services are only available to those who are willing and able to pay. Operates on the PPC curve |
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Term
| Pure eaglitarian system means what and is where relative to the PPC curve |
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Definition
| Centralized economy; everybody has access to the same goods ans services regardless of income. There is incentive to work less as a result not enought goods and services, meaning it operates insde the PPC curve. |
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Definition
| What is? deals with facts. |
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Definition
| What ought to? more subjective and controversial. A lot of "shoulds" |
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Term
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Definition
| =marginal cost=marginal benefit=marginal revenue |
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Definition
| the idea that once a firm chooses how to produce, some of its cost are become fixed |
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Term
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Definition
| Occur when cost/benefits associated with a transaction are not taken into account by parties making the transaction. |
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| Disadvantages of Centralized planning |
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Definition
- Inerta: slows response to chaning conditions
- Poor quality: no need to satisfy consumers and no accountability at point of service.
- Does not respect different values.
- Society loses through inefficiency
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Term
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Definition
| This is paying a premium to protect against a possible future financial loss. it is about avoiding risk. |
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Definition
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Term
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Definition
| Provides/sells the policy |
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Term
| Four types of insurance sponsors |
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Definition
- Employer
- Insurance company
- Govt. Health Exchange
- Govt. Plans
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Term
| Which two insurance sponsors also work as brokers? |
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Definition
| Goverment plans and insurance companies. |
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Term
| Financial incentives to providers |
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Definition
| Fee for serivce and capitation |
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Term
| Performance indicators of medical care |
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Definition
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Term
| Purpose of cost identification analysis |
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Definition
- Measures the cost of a medical condition or behavior on overall economy.
- Take an inventory of what is being spent
- Describe burden on illness in terms of $
- Cost description, which can be utilized in cost benefit analysis.
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Term
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Definition
| If expected benefits exceed expected costs for a given event, economic agent will purse option. |
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Term
| Two ways to represent Built-in Decision Rule |
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Definition
- Net benefit decision
- Total net social benefits
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