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Economics Chapter 3 - Economics Chapter 3 Understand this...

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Economics Chapter 3 Understand this! Economics does not work well in healthcare for many reasons. They don’t understand economics or the unique aspects of healthcare. We can see what will happen in the future if we understand the economic principles. Supply and Demand… Important but subtle differences in supply and demand. Why are we doing this and why is it important? Because we are in a market economy and consumers are deciding what is going to be produced. The sellers want to maximize profits, but consumer wants lower prices. Demand – Not the same as want or need. The ability and willingness to pay. Just because you have a want or a need for something doesn’t mean you have a demand for it. Two variables: Price charged and quantity demanded . Price is the independent variable. As the price charged changes, how does the quantity demanded change? As price charged increases, quantity demanded decreases. As price charged decreases, quantity demanded increases. If quantity demanded increases, but price stays the same, what causes the change? The new demand is not a function of
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