Briefly explain your understanding and learning of the topics and ideas covered from this Health Economics&Policy lecture with your own words, write one page

Overview This chapter provides an introduction to the discipline of economics and to health economics. You will learn about the types of questions that economics is concerned with and some of the key concepts that it uses. If you have not studied economics before, this chapter will introduce many expressions and concepts that may be new to you. You will find that you come to understand them better as you progress through the book. You will also explore the applicability of economics to health and health care. Learning objectives After working through this chapter, you will be able to: explain what economics is and the problems it seeks to solve describe what is meant by efficiency and opportunity cost define and use a number of fundamental economic concepts explain why economics is applicable to health define health economics and describe the scope of health economics . Key terms Allocative (Pareto, social) efficiency A situation in which it is not possible to improve the welfare of one person in an economy without making someone else worse off. Commodities (or production outputs) The results of combining resources in the production process. They are either goods or services. Demand (economic) The relationship between the price of a good and the quantity demanded (economic definition). Market Any situation where people who demand a good or service can come into contact with the suppliers of that good. Normative economics Economic statements that prescribe how things should be. Opportunity (economic) cost The value of the next best alternative forgone as a result of the decision made. Positive economics Economic statements that describe how things are. Overview Before learning about the principal concepts of economics and their application in health economics, you need to understand something about the methods used in economics. In this chapter you will learn about the use of graphical and mathe- matical ways of representing the relationship between inputs and outputs, including the essential concept of the margin. Learning objectives After working through this chapter, you will be able to: describe the methods of economists describe how graphs and equations can be used to represent economic relationships explain marginal analysis Key terms Ceteris paribus The assumption that all other variables remain unchanged. Economic model Representations of the real world, which omit all variables that are not relevant to the specific issue the model was designed to address. Marginal analysis The study of the consequences of small changes in a variable. Marginal utility The change in total utility derived from a one unit increase in consumption. Production function The functional relationship that indicates how inputs are transformed into outputs in the most efficient way. Economic analysis Economic models are representations of the real world, which omit all variables that are not relevant to the specific issue the model was designed to address. Models represent the relationships between different variables. They can be used to make predictions in the form of 'if... then ...' statements. Models, by definition, are able to make predictions about the effect of a change in one particular variable, while all other variables remain unchanged. The assumption that all other variables remain unchanged is referred to as the ceteris paribus assumption