Study Material on Healthcare Economics and Public Health

Contents
Part 1: MCQs...............................................................................................................................................1
Part 2: Short Answer Questions...................................................................................................................1
Part 3: Examples..........................................................................................................................................4
Part 4: Essay Type Questions.......................................................................................................................5
Bibliography................................................................................................................................................7

Part 1: MCQs
1) Home health care for the elderly may be costly because caregivers must spend time
providing care that they would have allocated differently.
2) 2. The share of health expenditure to indigenous people is Higher, on a per capita basis
compared to non-indigenous, given much poorer health outcome data.
3) Supplier-induced demand refers to All of the above
4) The asymmetry of information between health care consumers and providers explains
why health care providers may make decisions for patients and is one of the
explanations for market failure.
5) Society’s Trade-off between Guns and Butter Point Butter Guns. X= 40 units of butter
Part 2: Short Answer Questions
The demand and supply of the drug, given a free market, are explained in each of the situations
below. (Mankiw, 2008) Diagram Adapted from (Mankiw, 2008)
a) A change in technology that reduces the cost of manufacturing the drug
In the event that the cost of manufacturing the drug is reduces, the price of the drug will
decrease. This will lead to an increase in demand for drugs. In the long run, the supply may
change owing to a change in demand. The demand curve, thus, shifts, to the right.

Figure 1 Demand for Drug with a decrease in price
b) The availability of substitute leads to a decrease in the demand for the drug. Thus, the
demand curve shifts to the left. In the example below, the demand has shifted from
50,000 units to 30’000 units.