Health Economics Quiz: Test Your Knowledge

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Questions and Answers

What distinguishes needs from wants?

Needs are associated with clear negative outcomes if deficient, while wants are not. (correct)

Wants are subjective and psychological, while needs are objective and physical.

Needs require desire to pay for goods and services, while wants do not.

Wants are necessary for survival, while needs are optional.

What is demand according to the text?

The ability and desire to pay for goods and services. (correct)

A curve illustrating the relationship between the price of a product and the quantity demanded, all other things being equal.

The quantity of a product people are willing to buy at a certain price.

The desire and actual effort involved in bridging the gap between optimal health and ill health.

What is the relationship described by the demand curve?

The positive relationship between price and quantity demanded.

The inverse relationship between the price of a product and the quantity demanded. (correct)

The relationship between price and consumer preferences.

The direct correlation between price and quantity supplied.

In health demand, what does demand reflect?

The utilization of health care services to meet health needs. Signup and view all the answers

What is reflected by a high demand according to the text?

Increased supply of wants by the for-profit sector and governments. Signup and view all the answers

How is the quantity demanded defined?

The amount of a product people are willing to buy at a certain price. Signup and view all the answers

What is the basic principle of the law of demand?

The higher the price, the lower the demand. Signup and view all the answers

How does the law of supply differ from the law of demand?

The law of supply shows a positive relationship between price and quantity supplied. Signup and view all the answers

What is the relationship between supply and demand in a market?

Supply and demand can be equal. Signup and view all the answers

What happens when a market is at equilibrium?

The allocation of goods is at its most efficient and there is no tendency for the market price to change. Signup and view all the answers

Why do producers supply more at a higher price?

To increase revenue. Signup and view all the answers

What is the definition of market equilibrium?

When quantity supplied and quantity demanded are equal. Signup and view all the answers

What is the primary focus of health economics?

Analyzing the production, distribution, and consumption of healthcare goods and services Signup and view all the answers

What differentiates a 'need' from a 'want' in health economics?

A 'need' is a physiological or biological requirement, while a 'want' is a non-essential desire. Signup and view all the answers

Which of the following best describes the role of the public sector in filling societal needs?

Filling 'needs' by providing essential services such as roads and schools Signup and view all the answers

Which of the following is not a distinct topic covered within the scope of health economics?

The creation and distribution of wealth Signup and view all the answers

Which of the following is a common example of a 'need' in health economics?

Basic medical services Signup and view all the answers

What role does Maslow's hierarchy of needs play in health economics?

Maslow's hierarchy of needs is not relevant to health economics. Signup and view all the answers

What is the definition of demand in the context of a marketplace?

The summation at each price of the quantity demanded by each individual Signup and view all the answers

What occurs in a market when there is an increase in demand?

The demand curve shifts to the right Signup and view all the answers

What causes a change in the quantity demanded?

A change in the price of the good Signup and view all the answers

Which of the following is not a determinant of demand?

Market competition Signup and view all the answers

How does a demand curve account for a change in demand?

A shift of the demand curve to the right indicates an increase in demand Signup and view all the answers

What are the three main factors that influence health service utilization?

population health needs, their ability to pay, and availability of services Signup and view all the answers

What is the Law of Demand?

A claim that the quantity demanded of a good falls when the price of the good rises, other things equal Signup and view all the answers

What does a demand curve show?

The relationship between the price of a good and the quantity demanded Signup and view all the answers

What happens to the quantity demanded when the price of a good increases, according to the Law of Demand?

It decreases Signup and view all the answers

What is the difference between individual demand and market demand?

Individual demand is the demand of a single consumer, while market demand is the sum of all individual demands Signup and view all the answers

What is the shape of the demand curve, according to the Law of Demand?

Downward sloping Signup and view all the answers

Study Notes

Law of Demand

States that, if all other factors remain equal, the higher the price of a good, the less people will demand that good
The demand relationship curve illustrates the negative relationship between price and quantity demanded

Law of Supply

Demonstrates the quantities that will be sold at a certain price
The supply relationship shows an upward slope, meaning that the higher the price, the higher the quantity supplied

Supply and Demand Relationship

When supply and demand are equal, the economy is said to be at equilibrium
At equilibrium, the allocation of goods is at its most efficient because the amount of goods being supplied is exactly the same as the amount of goods being demanded

Equilibrium

An equilibrium is the condition that exists when quantity supplied and quantity demanded are equal
At equilibrium, there is no tendency for the market price to change
Everyone (individuals or countries) is satisfied with the current economic condition

Needs and Wants

Needs are distinguished from wants because a deficiency would cause a clear negative outcome, such as dysfunction or death
Needs can be objective and physical (e.g., food) or subjective and psychological (e.g., the need for self-esteem)

Demand

A schedule or curve that shows the various amounts of a product that consumers will buy at each of a series of possible prices during a specific period
Refers to the ability and desire to pay for goods and services
The quantity demanded is the amount of a product people are willing to buy at a certain price

Health Demand

The desire and actual effort involved in attempting to bridge the gap between optimal health and ill health through the utilization of health care services
Reflects the demand of all consumers in the marketplace for a particular good or service

Changes in Demand

An increase in demand means that, at each and every price, more of the good is demanded
A change in quantity demanded is not a change in demand; it is a movement along the demand curve
A change in demand shifts the demand curve

Determinants of Demand

Changes in consumer income
Changes in prices of related goods
Changes in consumer expectations
Changes in the number or composition of consumers
Changes in consumer tastes

Supply

A schedule or curve showing the amounts of a product that firms are willing to make available for sale at each of a series of possible prices during a specific period
The amount of a product or service that firms are willing to sell at alternative prices