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Key Economic Concepts Of Health Care Essay

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There are 10 key economic concepts of health care. Each of the economic concepts is important when evaluating the different issues related to health care such as the increasing cost of health care. Henderson (2015), list the 10 concepts as follows: scarcity and choice, opportunity cost, marginal analysis, self-interest, markets and pricing, supply and demand, competition, efficiency, market failure, and comparative, advantage. The concept scarcity and choice address the issues related to the limited supply resources and the need to economize (Henderson, 2015). An illustration of the importance of the scarcity and choice concept is when there is a low quantity of available resources to meet the demand of individuals and rationing occurs. Opportunity cost emphasizes…show more content…
The marginal analysis in relation to health care economics is a way of thinking about the optimal allocation of resources and making decisions at “the margin” (Henderson, 2015). Self-interest relates to economic decision makers’ personal interest that affects the decisions they make (Henderson, 2015). The markets and pricing concept is used to efficiently allocate the resources that are considered scarce (Henderson, 2015). The supply and demand concept is used as a tool in performing economic analysis (Henderson, 2015). Competition creates an environment where resource owners are forced to use their resources to promote the highest possible satisfaction of society (Henderson, 2015). Efficiency is used to measure how well resources are being used to promote social welfare (Henderson, 2015). Market failure is when the free market fails to promote the efficient use of resources (Henderson, 2015). Comparative advantage explores people benefit from the voluntary exchange when production decisions are based on opportunity cost (Henderson,
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