PUBH 3130 Study Guide - Midterm Guide: Competitive Equilibrium, Information Asymmetry, Population Health
Document Summary
First optimality theorem: no other allocation of resources to services that will make participants better off. Second optimality theorem: without increasing returns in production, every optimal state is a competitive equilibrium corresponding to some distribution of purchasing power. Redistribution of purchasing power: accomplished through money derived from taxes or subsidies. Either consumer pays to cover costs ot other or other pay consumer. Uncertainty of illness, an unpredictable or uncertain phenomenon. Failure to handle risk is a failure to reach a pareto-optimal state. If market fails to achieve an optimal state, nonmarket social institutions will arise in an attempt to bridge the shortcoming. Supply is controlled by returns from being in one industry vs another. Entry into medical profession is restricted by licensing and educational institutions. Returns to physicians outstrip costs to become trained. Services provide satisfaction utility only in event of illness. Demand is associated with assault on personal integrity. Product and production of product are identical.
