Please enable JavaScript.
Coggle requires JavaScript to display documents.
Article 2, Econ IA - Coggle Diagram
Article 2, Econ IA
Evaluation 1
-
Relate to the idea that healthcare produces a healthier society → more efficient workforce & economic actors
-
Recognize that if informal markets occur their will be a negative externality of production, Relate with analysis (2)
Black markets > Prices greater than price ceiling and the previous market-clearing price > Decreasing the effectiveness of the intent of the government intervention
"impose administrative fines and penalties" → Discourages growth of black markets & Suggests that over the long run a new market equilibrium will be achieved < price mechanism (signalling), A
Definitions
Introduction
Merit, common and normal good
Public & private services → relate that different effects will occur on the two different sectors (especially in terms of funding & development)
Law of demand, demand and supply (Healthcare acts a normal good. If informal markets occur, it may act as a luxury good).
Government intervention, price ceiling
Body
Positive externality of consumption, MSB, MSC. Social welfare, consumer surplus & producer surplus
Factors of production (Labour will eventually decrease due to decrease in revenue earned by producers, and so will wages)
Excess, shortage, profit maximisation
Market failure, allocative inefficiency
-
Economics Theories, Analysis
(1) Price-ceiling diagram → Drugs and medicine act as common pool resources, normal goods → relate that they are merit goods (underprovided in the market)
Relate to price determinants of demand & supply (I,e. quantity supplied decreases and quantity demanded increases with a decrease in price; movement along with SC DC)
Leftward movement of supply, decrease in price so quantity supplied by producers
-
Reduced producer surplus since price (thus profit maximisation) is prevented from rising to a higher market clearing price
(2) Effects of price-ceiling: Informal (black markets), decreased market size (reduced producer surplus and community surplus), rationing (due to excess demand consumers & producers will use other means than price, to determine who receives the products), supply shortage
-
Background Information
Region: Manila, [capital] Philippines: an archipelagic country in Southeast Asia.
Data & Contextualisation: Price ceiling imposed due to a high pressure on the disposable income of consumers for medications & drugs → 10.7% increase in per capita spending for healthcare services >> Demonstrates that PED is relatively inelastic (in response to changes in price) since healthcare is necessary merit good/common good
Quatations
-
B: "Spending for health was largely financed through government schemes and compulsory health care financing scheme"
-
-