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Lecture

Econ3510 lect 1.docx

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Department
Economics
Course
ECON 3510
Professor
All Professors
Semester
Summer

Description
Econ3510Lecture1Topic1IntroductiontoHealthCareSystemIntroductiontoEconomicAnalysisHealtheconomicsstudieshowresourcesareallocatedtoandwithinthehealtheconomyoTheproductionofhealthcareanditsdistributionacrosspopulationsfallswithinthisdefinitionWhyishealtheconomicsimportantoThesizeofthecontributionofthehealthsectortotheoveralleconomyoPolicyconcernsresultingfromtheimportancepeopleplaceonpursuingandmaintainingtheirhealthoThemanyhealthissuesthathavesubstantiveeconomicelementsHealth Cares Share of GDPApprox1outofevery10spentonfinalgoodsandservicesintheCdneconomygoestothehealthsectorInthiscalculationtheeffectsofgeneralinflationpriceincreasesarenettedoutTherearethreemajorpossibilitiestoexplaintheincreasesinpastyearsoPeoplemaybebuyingmorehealthservicesegdoctorsorderingmoretestspeoplebuyingmoredrugsoPeoplemaybebuyinghigherqualityandhencemoreexpensivehealthservicesthatwerepreviouslyunavailableoHealthpricesmayhaverisenfasterthanthegeneralinflationrateEconomic MethodsThiscoursewillemphasizefourdistinctivefeaturesofEconomicanalysis1Scarcityofsocietalresources2Assumptionofrationaldecisionmaking3Conceptofmarginalanalysis4Useofeconomicmodelstoexplainbehaviouroutcomes1 Scarcity of ResourcesEconomicanalysisisbasedonthepremisethatindividualsmustgiveupsomeofoneresourcetogetmoreofanotherIfscarcitywerenotaproblemwecouldallgetwhateverwewantandtherewouldbenoeconomicproblemsAttheheartistheconceptofopportunitycostTheopportunitycostofadecisioniswhatmustbegivenupvalueofthenextbestalternativeasaresultofthedecisioneventimehasaintangiblecost2Rational Decision MakingRationalityiseffectivelydefinedasmakingchoicesthatbestfurtheronesownendsgivenonesresourcesRationalityinvolvestheassumptionthatindividualsmakeconsistentchoicesthatmaximizetheirutilityiehappinesssubjecttotheirbudgetconstraintsSocalledirrationalbehaviouroftenmakessensewhentheincentivesandpreferencesfacingthedecisionmakerareproperlyunderstood3 Marginal AnalysisEconomicanalysesassumereasoningatthemarginTomakeanappropriatechoicedecisionmakersmustunderstandthecostandbenefitsofthenextiemarginalunitdecisionoThisinvolvesthementalexperimentoftradingofftheincrementalcostagainsttheincrementalbenefitatthemarginIfmarginalbenefitmarginalcostthendoit4 Use of ModelsEconomicstypicallydevelopsmodelstodepictitssubjectmatterThemodelsmaybedescribedinwordsgraphsormathematics
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