Introduction to Health Economics Flashcards
What is economics?
Study of choice under conditions of scarcity
What is scarcity?
Situation in which the amount of something available is insufficient to satisfy the desire for it
What is microeconomics?
Study of behavior of individual households, firms, and governments; the choices they make and interaction in specific markets
- individual parts of an economy instead of the whole
What is macroeconomics?
- Study of the economy as a whole
- Focuses on big picture and ignores fine details
What is positive economics?
- study of how economy works
- statements can be true or untrue
- accuracy of statements is tested by looking at facts
What is normative economics?
- Study of what ought to be
- Used to make value judgments, identify problems, and prescribe solutions
- statements are based on values
- statements cannot be proved or disproved by the facts alone
What are the types of assumptions in economic models?
- simplifying
- critical
What are simplifying assumptions?
make a model simpler without affecting any of its important conclusions
What are critical asumptions?
affect conclusions of a model in important ways
Who are the decision makers in microeconomic models?
- households
- business
- government agencies
Who are the decision makers in macroeconomic models?
- foreign sector
What is the 1st fundamental assumption?
individuals maximize some quantity
What is the second fundamental assumption?
every economic decision maker faces constraints
What 3 questions do economists ask?
- Who are the individual decision makers?
- What are they maximizing?
- What constraints do they face?
What are the 2 basic limitations?
- Scarce time
- Scarce spending power
