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case study economics

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Introduction

ECONOMICS POROMA GR 11 Economics case study (a) Explain whether health care is a private , merit or public care (b) Is health care a free good? Explain your answer (c) Does the quote from the doctor suggest that the market for healthcare is in equilibrium? Again explain your answer (d) Compare the effects of an improvement in the quality of product provided by the NHS and that provided by a private health care company (e) Explain 2 meanings of the word 'efficiency' (f) What is likely to happen to private sector firms which are not efficient? (g) In which market structure is information about best practice likely to be most freely available (h) Discuss the private and external benefits of health care. a) A public good is a good that is a benefit to society and is provided free of cost to society, usually by the government running the country. Theses goods are not provided by private companies and firms as they do not render profit, which thus leads to a market failure due to a lack of provision of public/merit goods. Examples for such goods are roads, streetlights, education, public libraries etc. NHS (National Health Service) ...read more.

Middle

Therefore the market equilibrium is altered as the supply does not meet the demand. d) Improvements in the quality provided by the NHS and the private healthcare company. The private sector's main motive is to earn profit. Any private company or firm's main goal is to earn profit. This can be done by having a large consumer base, thus to get achieve a large consumer base the firms continuously improve their services and are always striving for efficiency. Therefore an improvement in the private healthcare sector would not make a big difference as these firms are already always trying to provide better services to the consumers in order to make profits. Even though the prices are higher than the public sector people would with money would chose to a private clinic rather than a government healthcare facility, as it would be wiser for them to make use of the better healthcare facilities. If there are improvements in the public sector, the efficiency of the sector is improved and a lot more people would prefer going to public healthcare facilities rather than spending more money for the same service at a private clinic. The demand for the private healthcare services would decrease, and the firms would have to come up with innovative methods to restore their consumer base as a majority of the consumers would prefer paying less for healthcare for the same services provided by the private sector. ...read more.

Conclusion

Whereas in public sector there would be no such highlight as there is no one to compete against and no economic incentive. h) Merit goods are goods that are beneficial to the society and include services like healthcare defense etc. The marginal social benefits in providing healthcare are greater than the marginal production costs. For this reason healthcare is normally left up to the government to provide in many countries as private sector owners find no profit making scheme through it. The private and external benefits of healthcare are many. * Society remains healthy * When society remains healthy then the major workforce remains fit as well * Provision of healthcare = public good, like the NHS makes it easily accessible to the low income society. * If the main workforce of a country has access to healthcare, the overall development of a country increases. * The government also encourages the use /consumption of this service, as it is beneficial for all. * The healthcare services provided, if of good quality, makes sure that everyone in society gets their vaccines, health checkups etc. Thus ensuring that everyone is stable and in a well fit environment. * These services are more beneficial for the lower middle and poorer section of society. The poor do not need to spend much of their little incomes and are assured of the basic services. ...read more.

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