Economics and its 2 Branches

Economics
➔ science and art of decision making, regarding the use of scarce resources under the conditions of
scarcity to attain maximum satisfaction.
➔ ancient greek word “oikonomia” which is a term for “way” (nomos) to run a household (oikos)
➔ 2 branches of economics: microeconomics, macroeconomics

Microeconomics
➔ markets are defined narrowly
◆ focus on models that define much more specific commodities
➔ always involves some aggregation
◆ the process stops before it reaches the highest level of generality

Macroeconomics
➔ goods and services are aggregated to the highest levels
◆ macro models lump all consumer goods into the single category “consumption goods”
◆ macro models will also analyze all capital goods as one market
◆ macroeconomists take an overall view of the economy without getting bogged down in
details

What is Health Economics and its importance

Health Economics
➔ study of distribution of health care
➔ branch of economics concerned with issues related to efficiency, effectiveness, value and behavior
in the production and consumption of health and health care
➔ allocation of resources within the health system in the economy

Health economics is important because it focuses on how the economic behavior of stakeholders and
recipients affects the quality and cost of medical care. It includes how people pay for care, how those
payments are processed, and how health systems around the world can be restructured and improved.

Normative and Positive Economic Statement

Models of Economics

● Positive Economics
- without judgment
- how things are

● Normative Economics
- value judgment
- how things should be

Concept of Supply and Demand

➔ Supply and demand model is designed to explain how prices are determined in perfectly competitive
markets
◆ perfect competition is rare but many markets come reasonably close
◆ perfect competition is a matter of degree rather than an all or nothing characteristic
➔ Supply and demand is one of the most versatile and widely used models in the economist’s tool kit
Supply
➔ a firm’s quantity supplied of a good
➔ market quantity supplied

Law of Supply
➔ states that when the price of a good rises and everything else remains the same, the quantity of the
good supplied will rise

Change in Supply
➔ regardless of price (factors)
➔ may factors para maiba yung supply

Change in Quantity Supply

➔ price determines the supply
➔ kapag tumaas yung price, tataas din yung supply

Demand
➔ quantity of a product or service wanted by buyers
➔ relates to the price of the service and the availability of supply

Law of Demand
➔ states that when the price of a good rises and everything else remains the same, the quantity of the
good demanded will fall

Change in Demand
➔ regardless of price (factors)
➔ may factors para maiba yung demand

Change in Quantity Demand

➔ price determines the demand
➔ kapag tumaas yung price, bababa yung demand

Equilibrium

Equilibrium
➔ price of a good and quantity bought and sold have settled into a state of rest/constant

Inelasticity

Inelastic Goods
➔ demand remains relatively constant despite changes in price or income

General Economic Resources

Scarcity
➔ the fact that there is a limited amount of resources to satisfy unlimited wants

Economic Resources
➔ things that are inputs to production of goods and services. There are four economic resources: land,
labor, capital, and technology. Technology is sometimes referred to as entrepreneurship.
Land
➔ natural resources that are used in the production of goods and services.
➔ some examples of land are lumber, raw materials, fish, soil, minerals, and energy resources.

Labor
➔ work effort used in the production of goods and services.
➔ some examples are the number of workers and number of hours worked.

Capital
➔ physical goods that are produced and used to produce other goods.
➔ examples of capital would be machinery, technology, and tools such as computers; hammers;
factories; robots; trucks, and trains used to transport goods; and other equipment employed in the
production of a good or service.

Technology
➔ (sometimes called entrepreneurship) the ability to combine the other productive resources into
goods and services.

WHO 6 Building Blocks of Health

★ Service Delivery
★ Health Workforce
★ Health Information Systems
★ Medical Products, Vaccines & Technologies
★ Health System Financing
★ Leadership/Governance

Social Determinants of Health

Social determinants of health (SDOH) have a major impact on people’s health, well-being, and quality of
life. Examples of SDOH include:

● Safe housing, transportation, and neighborhoods

● Racism, discrimination, and violence
● Education, job opportunities, and income
● Access to nutritious foods and physical activity opportunities
● Polluted air and water
● Language and literacy skills
● Income and social protection
● Education
● Unemployment and job insecurity
● Working life conditions
● Food insecurity
● Housing, basic amenities and the environment
● Early childhood development
● Social inclusion and non-discrimination
● Structural conflict
● Access to affordable health services of decent quality.

GDP/GNP

Gross Domestic Product (GDP)

➔ standard measure of the value added created through the production of goods and services in a
country during a certain period. As such, it also measures the income earned from that production,
or the total amount spent on final goods and services (less imports).
Gross National Product (GNP)
➔ estimate of the total value of all the final products and services turned out in a given period by the
means of production owned by a country's residents.

Health Care Cost - types of costs

Health Care Cost

➔ the actual costs of providing services related to the delivery of healthcare, including the costs of
procedures, therapies, and medications.

Types of Costs

★ Direct Costs
- those immediately associated with an intervention such as staff time, consumables etc.

★ Indirect Costs
- costs that don’t relate to a specific product or service you’re selling to customers (might
include a patient’s work loss due to treatment)

★ Intangible Costs
- may be things like pain, anxiety, quality etc.

Economic Evaluation - its importance, and methods

Economic Evaluation
➔ use to identify, measure, value, and compare the costs and consequences of different public health
interventions
➔ can consider both resources used and health outcomes achieved simultaneously. It can also be
useful in supporting decision-making when resources are limited

Methods of Economic Evaluation

★ Program Cost Analysis

- approach to estimate the costs of implementing a program or intervention
- use of economic costs rather than financial costs alone

★ Cost of Illness Analysis

- way of measuring medical and other costs resulting from a specific disease or condition

★ Cost-Effectiveness Analysis
- way to examine both the costs and health outcomes of one or more interventions

★ Cost-Benefit Analysis
- way to compare the costs and benefits of an intervention, where both are expressed in
monetary units

Land and Agrarian Reform

Land Reform
➔ it is a process of redistributing land from the landlords to tenant-farmers in order that they will be
given a chance to own a piece of land to improve their plights
➔ RA 6657
Agrarian Reform
➔ rectification of the whole system of agriculture
➔ concerned with the relation between production and distribution of land among farmers

Tax and Taxation - its importance and principles

Tax
➔ an involuntary fee levied on corporations or individuals that is enforced by a level of government in
order to finance government activities
➔ an enforced proportional contribution from persons and properties by the law making body of the
stage by virtue of its sovereignty for the support of government and all public needs

Taxation
➔ inherent power of the government, exercised through legislature, to impose burdens upon the
subjects and the objects, within its jurisdiction, for the purpose of raising revenues to carry out the
legitimate objects of the government
➔ a method of apportioning the cost of government among those who are, in some measure, are
privileged to enjoy the benefits, hence, a share in the burden
➔ is a means by which governments finance their expenditure by imposing charges on their citizens
and corporate entities

Purpose and Importance of Taxation

➔ to generate revenues for the government.This would enable the government to perform its functions

In addition to this major function of taxation are the following non-revenue objectives of Taxation:

a. Strengthen enterprises or provide incentive to greater production (tax exemptions, discounts, tax
holiday)
b. Protect local industries against foreign competition by increasing import taxes
c. As a bargaining tool during trade negotiations
d. May be increased to curb spending power in time of prosperity to lower inflation or decrease during
recession and ward off depression
e. May be levied to reduce inequalities of wealth and incomes (estate, donor, income)