Healthcare Economics 1. In Chapter 1 of the Folland et al text, is...

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Healthcare Economics 1. In Chapter 1 of the Folland et al text, is provided an introduction to economics and how and whether it applies to health care. Towards the end of the chapter, the authors provide seven reasons for why health care is different and therefore direct applicability of economics is a challenge. Please choose two of the seven reasons to explain the unique challenges in directly applying economics to health care. In providing these explanations, please provide your own examples to reinforce your reasoning. 1.“Large role of Nonprofit Firms”: 2.” Government Subsidies and Public Provision”: 2. The demand for health care is considered to be derived demand. What is meant by ‘derived demand?’ Explain this concept together with relevant examples. 3. Please refer to the table below. This table contains ball-park figures for the population in the U.S., the number of physicians as well as health expenditure from 1970 through 2010. Use the figures in this table to compute the average and marginal expenditures for the U.S. population as well as physicians for this data. What patterns emerge from your computation of these average and marginal expenditures? 1970 1980 1990 2000 2010 U.S. Population 200,000,000 225,000,000 250,000,000 280,000,000 310,000,000 Number of Physicians 300,000 450,000 600,000 800,000 1,000,000 Health Expenditure ($ billions) 75 250 700 1,400 2,500 4. Average visits per week equal 640 when the copay is $40 and 360 when the copay is $60. a. Calculate the percentage change in visits, percentage change in price, and price elasticity of demand using 640 and $40 as the denominators for percentage change calculations. b. Calculate the percentage change in visits, percentage change in price, and price elasticity of demand using 360 and $60 as the denominators for percentage change calculations. c. Calculate the percentage change in visits, percentage change in price, and price elasticity of demand using 500 and $50 as the denominator for percentage change calculations. (This is an arc elasticity calculation.) d. How does your interpretation of elasticity change based on the calculations in ‘a’, ‘b’, and ‘c’? If you had to choose only one of these measures of elasticity, which would you choose? Why? 5. The concept of elasticity of substitution relates to task shifting. In Table 6.1 of the Folland et al text are provided elasticities of substitution for teaching and non-teaching hospitals. Please explain this table and state your conclusion based on this explanation. 6. In economics, the concepts of economies of scale and economies of scope if often used in the context of production. How are these concepts similar and different? Please use your own examples to explain these concepts.

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In Chapter 1 of the Folland et al text, is provided an introduction to economics and how and whether it applies to health care. Towards the end of the chapter, the authors provide seven reasons for why health care is different and therefore direct applicability of economics is a challenge. Please choose two of the seven reasons to explain the unique challenges in directly applying economics to health care. In providing these explanations, please provide your own examples to reinforce your reasoning.

1. a. "Role of Equity and Need":
The "need" of health care is different from the "need" of another product like a pair of shoes in our Economy. But whether
we ought to provide health care people "need" depends on lots of factors, such as the population and the total social wealth of
the country, and also on how to define the "need" of health care for people. These factors could lead total different health care
insurance policy. For example, in some European Countries, every citizen can experience free health insurance. But for some
Asian countries, government does not provide any help in health insurance for their citizens. It is hard to say which is more
effective for maximizing our social total warfare. And how to define the basic "need" of health products is extremely challengeable because of the role of equity comparing to the need of a pair of shoes in our economy....

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