Health Economics Information Resources: A Self-Study Course
Key General Economics Concepts
This section is intended to present the names and descriptions of concepts that were not covered in the four health economics modules available for study. Two academics with many years experience between them teaching health economics courses suggested that you might wish to explore these concepts on your own by reading some of the available health economics textbooks and articles listed in the bibliography.
Additional general and health economics concepts include:
Competitive equilibrium model
A model that assumes utility maximization on the part of consumers and profit maximization on the part of firms, along with competitive markets and freely determined prices.
Differences in cost concepts such as direct and indirect (or overhead) costs (accountants' language) and fixed and variable costs (economists' language)
A graph of demand showing the downward-sloping relationship between price and quantity demanded. (Taylor)
Diminishing marginal utility of income
Makes insurance worthwhile to risk averse individuals
An externality is the situation in which the costs of producing or the benefits of consuming a good spill over onto those who are not producing or consuming the good. (Taylor)
Health production function
A production function is a relationship that shows the quantity of output for any given amount of input.
Utility is a numerical indicator of a person’s preferences in which higher levels of utility indicate a greater preference. (Taylor)
The branch of economics that examines the workings and problems of the economy as a whole—GDP growth and unemployment.
The branch of economics that examines individual decision-making at firms and households and the way they interact in specific industries and markets.
The margin (marginal cost)
Marginal cost is the change in total costs due to a one-unit change in quantity produced. (Taylor)
The incremental determination of how much of some service or product to produce.
Price and income elasticities
Market sensitivities to changes in prices and incomes. Price elasticity of demand is the percentage change in the quantity demanded of a good divided by the percentage change in the price of that good. Price elasticity of supply is the percentage change in quantity supplied divided by the percentage change in price. (Taylor)
Pricing in competitive and monopoly markets
Price refers to a particular good and is defined as the amount of money or other goods that one must pay to obtain the good. Income elasticity of demand the percentage change in quantity demanded of one good divided by the percentage change in income. (Taylor)
Supply and demand
Supply - a relationship between price and quantity supplied. Demand - a relation- ship between price and quantity demanded. (Taylor)
A graph of supply showing the upward-sloping relationship between price and quantity supplied. (Taylor)
Glossary and Resources, Economics and Ethics Modules. [online].
Byrns, Ralph. A Glossary of Economics Terms. January 2003.
Glossary, in: Taylor, John B. Economics, 3d edition. Stanford: Stanford University Press, [n.d.]