W1- Markets and market failure in healthcare Flashcards
(8 cards)
What is Technical efficiency
Assesses the best way of achieving an objective e.g. minimising the amount of resources required to achieve a particular objective - ‘doing things right’
What is Allocative efficiency
Assesses the best way of maximising total welfare across all activities e.g. whether to allocate resources to a programme - ‘doing the right things’
what is the opportunity cost
Issues such as resources (land,labour, capital) are limited but our wants are unlimited. Choices need to be made which involve foregoing another alternative e.g. if we use some of the budget to treat one group then there is another group that may not be treated. This is referred to as the opportunity cost
what is a market
Forum where buyers (consumers) and sellers (producers) interact to exchange goods and services with minimum government intervention
Price and quantity act as signals- as price falls quantity buyers want to buy increases but quantity sellers want to sell reduces
what is an Externality
Externality is benefit or cost from consumption or production that affects others but not the buy (positive and negative). If externalities are not taken into consideration the market will produce too little (if it’s a positive externality)or too much (if it’s a negative externality)
what are the Benefits of perfectly competitive markets
Efficiency (both technical and allocative) due to profit/sustainability motive (not all private providers are for-profit)
Competition - improved quality in response to consumers (they can ‘vote’ with their feet)
More choice - providers may be more responsive to consumer needs
Innovation
No need for government intervention
How do you deal with externalities
Compel people to be vaccinated or subsidise vaccination
Subsidies to ensure greater consumption of healthcare by the poor
Regulate the provision of services so that they are based on societal evaluations that include the value/costs of externalities
define the opportunity cost
the values of the best alternative use of resources
