Health EconomicsThe law of demand states that as the price of products increases, the quantity demanded of the products decreases while on the other hand the quantity of products demanded increases as the prices of the products decreases (Folland et al, 2007). This implies that consumers will purchases more products at lower prices while at higher prices consumers resort to other substitute products and purchase low quantities of the product.The law of supply states that when there is high prices of products, producers will be willing to offer more products in the market while when there are low prices in the market the quantity of products offered for sale in the market decreases. This means that quantity supplied in the market increases when the prices of the products increase while the quantity supplied in the market decreases when the prices of the products decreases.
Demand is the quantity of goods and services that consumers are willing and capable of buying at particular prices in the market while on the other hand supply is the quantity of goods and services that the producers are willing to offer for sale in the market at a given price. Demand has a negative relationship with the price of the products while supply has a positive relationship with the price of the products. This implies that at low prices more quantities will be demanded while fewer quantities will be supplied in the market. On the other hand, at high prices low quantity will be demanded while high quantities supplied in the market (Folland et al, 2007).The determinants that can cause a shift in demand include all other factors that affect quantity demanded apart from price. These include changes in income levels of consumers, taste and preferences of consumers, whether changes and the price of substitutes products.The law of diminishing returns states that aIDing one more inputs in all production processes while other factors are kept constant will at some point results to low output per unit (Folland et al, 2007). This implies that as more inputs are aIDed towards the production process, it will reach a level that aIDing more inputs will not lead to increased productivity of organizations. An example of law of diminishing return can be illustrated using laborers who are working on agricultural production firm. As the number of laborers is increased while holding other factors constant, the output of the firm will increase until it reaches a point when aIDing one more laborer will lead to low output than the previous laborer. This is because aIDing more employees will eventually results to the overcrowding of the firm thereby decreasing the efficiency of workers.
The primary factors that have caused shortage in the physician workforce over time are associated with lifestyle concerns of the profession. The profession of the physicians is characterized with tight schedules. The income level for physicians is also low as compared to the income of other professionals. This makes it to appear less lucrative and attractive to the potential physicians. There is also lack of prestige that is associated with this profession. These lifestyle concerns associated with the physician workforce contribute to the diminishing of the interest of individuals in the profession. The shortage of physician workforce has however been relieved through one major factor that include increase of the income level of physicians. The increase in salaries and benefits of physicians help attracts individuals to pursue the profession hence reduce the shortages of the physicians.
Public interest theory is an economic theory that states that regulation is offered due to the demand by the public to correct inefficient market practices (Folland et al, 2007). Regulation benefits the society as a whole as opposed to the specific interest groups in the society. In this case, the regulation authority considers the interest of the society as a whole as opposed to private interest of the regulators. Since health matters are a concern of the whole society, the governments have to develop policies that ensure that the healthcare services are available and affordable to the society as a whole. Special interest theory on the other hand states that the regulation is offered due to the demand of individuals in the society who might take their power, position or authority to influence certain regulation to favor their particular interests in the society at the expense of the public interest. The government can develop policies that ensure that the less privileged groups in the society such as the poor, orphans and persons with disability are offered appropriate healthcare services to suit their needs.The theory, which is most accurate, is the public interest theory since it caters for the whole society hence avoids chances of biasness in the society.
The information imperfection in healthcare is a case where individuals in the society lack important information regarding the health care products such as price, availability, alternative products and the effectiveness of the products (Folland et al, 2007). This makes it difficult for individuals to decide on the type of medication to take but instead individuals are imposed to certain types of health care products and medication. The imperfection of information in the market has numerous consequences. Individuals can be charged high prices for the health care products as a result of lack of knowledge regarding the prices and the alternative products. It can also result to market efficiency causing a number of consequences such as shortages of drugs and administration of wrong drugs to patients. The market imperfection in the health care sector can also cause some market uncertainties such as deaths and illness associated with wrong healthcare products, improper medication and shortage of health care products.Folland, S., Goodman, A. C., & Stano, M. (2007).(Vol.6). Upper SaIDle River, NJ: Pearson Prentice Hall.