Key Concepts Flashcards
Whats is economics?
The study of scarcity and how we address this problem.
Rationality?
The assumption that when a consumer is given all the information necessary to make a choice of product/services, they will choose the option that is in their best interest (maximize utility)
What is utility?
The satisfaction or happiness gained from consuming a good. The more utility, the higher the person is willing to spend to gain it.
Example: health insurance - young, healthy etc: may not be willing to spend over X amount on health insurance.
Older, health problems: more likely to be willing to pay more for insurance as they gain more utility from the good.
What are resources?
Examples - land, capital, labour
Valued in monetary terms. All the items available within an economy that can be used in the production of goods and distribution of goods.
What is opportunity cost?
The value of the benefit of the next best alternative.
Example:
What is efficiency?
Maximizing benefits or/while minimizing costs
Who is included in the health sector?
- All private and public practice and health services
- Policies and activities of govt departments and ministries
- Non- Govt groups and community groups
- Professional organisations.
What is the market?
The market is where the price at which a good will be traded at is decided by demand and supply of the good.
Give two types of goods?
- Consumption Goods: directly satisfy what people want
2. Intermediary goods: used to make other goods
What ways can goods be used?
To consume (panadol for a headache)
To invest (risk and reward - utility comes from investment value)
To exchange - buy a good for its exchange value
What type of market are most markets?
Mixed markets - where both government (central planning) and market forces play a role
