Economics in heakthcare

1. Provide an example of a demand curve in health care How could this example affect the economics of health care? Using the answer below. Your response should be 150 words. Please ensure to substantiate your response with scholarly sources or a personal account of your own experience in the workplace

Answer: 1

A demand curve is a graph that illustrate the "relationship between the price of a service or commodity and the willingness and ability of consumers to pay for it." Demand curve also estimate behaviors in competitive markets. In an elastic curve, as the price for a commodity increases, the demand will decrease at a similar rate along the curve. The demand curve for health care is what is called an inelastic curve. This means that although the price of health care is continuing to rise, the demand is not decreasing at the same rate. This will continue to occur because unlike other commodities, people need health care, and no matter what the cost, people will continue to seek medical care to cure their ailments. As long as consumers maintain an unhealthy lifestyle, the demand for health care will not decrease. This is one of the reasons that many employers are shifting from a more traditional health care plan to a consumer driven plan. By making the consume more responsible for the choices they make, they will begin to maintain a healthier lifestyle, and will be more aware of their health care choices and needs. When income increases, the demand curve for normal goods shifts outward, more will be demanded. Binger, B & Hoffman, E.: Microeconomics with Calculus, 2nd ed. Addison-Wesley 1998. A change in relative price changes the distribution of income which in turn changes the demand curve.

2. Provide an example of a demand curve in health care How could this example affect the economics of health care? Using the answer below.Your response should be 150 words. Please ensure to substantiate your response with scholarly sources or a personal account of your own experience in the workplace

Answer 2. A demand curve in health care according to Feldman (1993) is "measuring the quantity of medical care that consumers demand at different prices." (p.193) A demand curve is determined by a graph that shows how a service or product varies by the differences in price. Different demand curves in health care show organization leaders what product or service a consumer is in more demand based on the price. One primary example is pharmaceutical products, whether they are over the counter or prescribed. There will always be a demand curve for these products, based on the prices that different companies provide. Whether it is over the counter or prescribed, there are companies that offer the name brand product and companies that provide the same product but are considered off brand. There is always a demand curve for pharmaceutical products because they are needed and consumers determine if they want the name brand or off brand. This example can affect the economics of health care because consumers may all start wanting to buy the off brand product because it produces the same effectiveness as the name brand product, as well as the consumer spending less. A trend such as this could affect the economics of health care because is would force the name brand companies to reevaluate the price of their name brand product. The company would have to consider whether to continue selling at the increased price or compete with the off brand companies. Feldman, Roger. (1993). What does the demand curve for medical care measure?. Journal of Health Economics, 193,-200. Retrieved from http://doi:10.1016/0167-6296(93)90028-D

3. What is revenue? How is marginal revenue determined? Why is it necessary to at least have marginal revenue in a health care organization? Your response should be 200-300 words. Please ensure to substantiate your response with scholarly sources or a personal account of your own experience in the workplace.

4. Using the answer below, give an example of a marginal revenue in health care organization.150 word count

Answer 4. Something interesting to consider when discussing marginal revenue is that depending on the type of business you are running, marginal revenue may also have to be compared to the amount of revenue it "cannibalizes" from sales at regular price. For example, a key question when dropping the price of a haircut to $8 is how many new clients you are attracting. If the seniors who are coming in after 8 p.m. would have come at regular hours and paid $10 anyway, you are simply working longer hours and giving $2 away every time someone takes advantage of the discount. When an existing customer buys at discounted prices instead of paying full price, the price cut is said to have cannibalized sales. To measure the full impact of cannibalization, you must keep careful track of your marginal revenue (Ozyasar, 2015). Ozyasar, H., (2015). Importance of Marginal Revenue. Retrieved from http://smallbusiness.chron.com/importance-marginal-revenue-65098.html

5. Based on the answer below, why is it necessary to at least have marginal revenue in a health care organization? Give an example, 160 word count.

Answer 5. Revenue is the gross income of a company. This could include the amount of money gained by sales or returned merchandise. Most commonly revenue is referred to as top line and that is because it is the first line on the company's income statements. Marginal Revenue is defined as "the increase in revenue that results from the sale of one additional unit of output. Marginal revenue is calculated by dividing the change in total revenue by the change in output quantity." (Marginal Revenue - MR) Marginal revenue helps the organization to determine their profitability by calculating any additional money gained from the general expense of producing the product. It is necessary to at least have marginal revenue in a health care organization to help the organization to determine its marginal cost to help show if the organization is making any profit at all or if they are operating at a negative profit thus losing the organization money. This also lets the organization know if marketing is needed and in which areas by calculating the marginal revenue within each department. This figure helps the organization know if prices need to be raised or prices can be lowered to allow for the organization to make more profit for the services that are being rendered. Marginal Revenue - MR. (n.d.). Retrieved from Investopedia : http://www.investopedia.com/terms/m/marginal-revenue-mr.asp