9 - Economics I Flashcards
1
Q
Economics
A
- Study of how limited resources can best be used to fulfill UNLIMITED human wants
- *many decisions we make in vet med have economic implications
2
Q
Why worry about economics?
A
- Studies and trials of potential various treatments or control programs to affect the biological aspects of disease not necessarily talking abou the economics
- *do the costs incurred by treatment JUSTIFY the gains or returns?
3
Q
Economics can be used to
A
- Evaluate the past
- Quantify/describe the present
- Predict or plan for the future (least effective)
- *does NONE of them PERFECTLY
4
Q
Economic predictions
A
- Often imprecise
- *compare your level of confidence in various things
- FORECASTING is the primary reason for economic evaluations
5
Q
Economic analyses utilize
A
- ‘models’ to approximate reality
o Need simplifying assumptions (realistic and valid for my situation?)
6
Q
Example: how much does it cost to go to the store to buy milk
A
- How far to the store?
- Cost of milk and gas
- Labour (mine vs. my brothers)
- How long will it take? (TIME)
- Type of car
- Milage
- Accident on the way? Paralyzed?
- *need to have some ‘windows’ around a model
- *how accurate does it need to be?
7
Q
Biological systems are ‘OPEN’ systems
A
- Involve MANY VARIABLES
- Degree of precision is often POOR
- Even with imperfect information, order of magnitude can be helpful
8
Q
Economics and human behaviour variables
A
- Profit
- Utility
- Risk
9
Q
Profit
A
- Profit=revenue minus expenses
- *hard to determine revenue and expenses
- Easy to focus on it as an END POINT=MOTIVATION
- Understandable
- Quantifiable units (dollars)
- Can compare several different aspects, enterprises or industries
10
Q
Not everyone is motivated SOLELY by profit
A
- Concept of UTILTY
11
Q
Utility
A
- Everyone has a concept of what is ‘good’ for us
- Abstract concept
- Not as easily measured as dollars
o Security, peace, fun, lack of change, fulfillment - *people don’t always respond ONLY to monetary motivators
- **BECOMES important in companion animal and human medicine
- *cost and expenses still involved but different measures
12
Q
Food animal producers
A
- Profit isn’t necessarily a goal, but a CONSTRAINT
o Necessary to survive - Often do financially stupid things b/c something else is MORE IMPORTANT to them
- *try to increase production (only half the profit equation)
Ex. is the increased production sufficient to pay for the effort to achieve it?
13
Q
Risk
A
- Another aspect of producer behaviour
- 2 basic aspects
- *most are RISK ADVERSE
14
Q
What are the 2 basics aspects
A
- Probability of harm
- Magnitude of bad outcome (severity of impact)
15
Q
Probability of harm
A
- How likely is something bad going to happen
