Microeconomics and Macroeconomics Concepts

This document explores the concepts of microeconomics and macroeconomics and their impact on healthcare in Sierra Leone. It discusses market failure, market imperfections, factors of production, labor market, financial market, government fiscal policy, government monetary policy, supply side and demand side issues, inflation and price stability, international business and trade, and economic growth and balance of payment.

Microeconomics and
Macroeconomics
Concepts

Table of Contents
A: OVERVIEW OF CASE STUDY................................................................................................3
B: MICROECONOMIC CONCEPTS.............................................................................................3
B: MACROECONOMIC CONCEPTS...........................................................................................5
REFERENCES................................................................................................................................9

A: OVERVIEW OF CASE STUDY
Well-being is very crucial term for citizen’s stability and growth of economy. In terms of
Sierra Leone that is a depressed state due to which people cannot enjoy decent living. In Sierra
Leone, health professionals are not getting paid properly due to which they cannot manage
services effectively. To facilitate the health services delivery to the people who are good of
taxpayers for protecting the body as valuable human capital. In this HSS play essential role in
delivery the health services such as medical care, dentistry etc. to protect the wellbeing of
citizens. This case study undertakes the impact of micro economics and macroeconomics that is
to be presented in terms of linking with Sierra Leone.
B: MICROECONOMIC CONCEPTS
Microeconomics refers to the decisions of an organisation and an individual to allocate the
resources for production, consumption and exchange. It mainly deals with production of products
and prices of offerings within single market along with integration with several markets on micro
levels (Thampapillai and Ruth, 2019). In case of Sierra Leone failure in systematic healthcare
was one of the major issue that is demonstrating within case study that is reflected by using the
several concepts of micro economic. Several concepts of Microeconomics are presented below:
 Market failure and imperfection- Market failure is a part of economic situation that
defines the inefficient distribution of goods and services within the marketplace. Within
the typical free market the price of goods and services identified by the forces of supply
and demands. In terms of Sierra Leone, the main cause of market failure is dysfunction in
price system and in this health professionals are poorly paid that would affect their decent
living. There are several factors of market failure that are demonstrated below:
o Externality- It refers to cost or benefits in terms of welfare of one party resulting
from activity of another party, without any compensation for losing party. This
reflects the consumption and production of offerings if third party faces issues due
to this activity that is known as negative externality whereas third party gain from
this activity is known as positive externality (Greenlaw, Shapiro and Taylor,
2018). In terms of Sierra Leone, health professional are paid less due to this they
cannot manages the service properly that will affects public health.

o Public goods- It refers to that factor that is consumed by large number of
population where cost does not increase with the increase of consumers. In terms
of Sierra Leone, they offer health services to consumers in which they pay tax to
protect the body as valuable human capital.
 Market imperfection- It refers to that market which does not meet the rigorous
standards of hypothetical perfect. In terms of Sierra Leone, the major cause of market
imperfection is rent seeking that manipulates the economic conditions for gaining more
revenues but it affects their professional to meet decent standard living.
 Market and factors of production- Factors of production refers to those resources that
are used by people to produce goods and services. These reflect as building blocks of
nation’s economy. It is mainly divided into four categories: Land, labour,
entrepreneurship and capital.
o Land- It refers to a physical place where economic activities were taken place. In
terms of Sierra Leone that is a place where human being excessively use the
natural resources that impact the health of people and also affected eco-system of
nation (Harcourt, 2019). To provide health services within Sierra Leone, people
convert the natural resources in land for gaining profits by offering services.
o Labour- It refers to the people who are working for transforming the resources in
goods and services that can be useful and purchased by people. In Sierra Leone
heath service providers are highly skilled but they cannot get the decent pay due
to which the activities related to offering services are not managing properly.
o Capital- It mainly denoted as money that facilitates the process of production of
goods and services. It is core to deliver the value to people. In this government of
Sierra Leone focus on providing financial help to HSS so that they deliver the best
to their workers that develops the living standard of their people.
 Labour market and its stickiness on production- Labour market refer to that market
that matches potential employers of people with the people who are available for work. In
terms of Sierra Leone, the labour market is highly effective as there are people who
provide best health services to society people but because of low pay they cannot perform
their functions properly and in this those who want job get the employment opportunity
easily because of un-decent economy. In this Sticky labour market is define as those

market where workers are not progressing well and Sierra Leone is a type of Sticky
market where labour are not progressing because of poor development of economy.
 Financial market and its importance- It refers to a marketplace where people do
trading and create financial assets like debentures, shares, bonds, currencies and many
more take place. In simple words, within this market people do the trading of financial
securities at low transaction cost. This market plays a significant role in allocating the
limited resources within the nation economy. Therefore, business and investors deals in
financial market for raising money for developed their business and make more financial
resources for developing their living standards. There are several importance of financial
market that are presented below:
o The main importance of financial market is to offer place to investors and
business man to raise money according to their size and also they get proper
treatment within this market (Shiu, Chow and Watson, 2020). In terms of Sierra
Leone, investors of this nation within HSS focus on raising money by getting
supports from government and other country.
o This market helps in providing employment to the unemployment person within
nation so that standard of living is to be enhanced along with good growth of
nation.
B: MACROECONOMIC CONCEPTS
Macroeconomics studies are wider studies that include understanding of economics in a
country as a whole. There fall various concepts in the Macroeconomics which are useful in
addressing wider issues of economy such as investments levels, interest rates, financial markets,
inflation recession unemployment and many more such issues of national and international
importance (Jackson, 2019). Under the case of systematic healthcare failure in Sierra Leone was
one such issue of national importance. The problems were not related to failure of any one single
firm of Hospital or Pharmaceutical Company but healthcare in entire economy has been seen
failing. To get a better insight about the issue of Market failure of Healthcare in Sierra Leone, it
is important to understand case through basic concepts of Macroeconomics. In this section of the
report these have been attempted: Government Fiscal Policy- Fiscal Policy of the government can be defined as those
measures of government which it uses to make an economic boost in the economy. The

government is responsible for managing and addressing all the issues that are causing in
bringing economic slowdowns, under the fiscal policy government is seen making
investments in market itself. This is required by government to boost positive sentiments
in the economy. Now, since this investment is made out of fiscal reserves of the
Government, these are part of fiscal policy of the government, for reviving the economy.
In the case of Sierra Leone, Government will be required to focus over the key areas.
Sierra Leone is a typical developing country, having poor business sentiments and low
income of people, along with long history of Civil war as well. Thus Government
initiatives in offering low healthcare, hospitals and medical facilities are crucial. Government Monetary Policy- In the Government monetary Government is not seen
making direct interventions but try to revive economy through other way round. This is
an indirect approach. Government is available with many tools, like interest rates,
taxation, subsidies, government securities and many more by efficient management and
fluctuations in them government can motivate people to revive failing markets but do not
intervene itself. Government in Sierra Leone can help people through lowered tax rates
on Health expenditure to make use of health services at best possible. When the entities
involved in providing these services will be motivated by demand then they will for sure
make progress in healthcare sector and the markets will boost. Similarly, government can
take steps on reducing interest rates on availing loan, so that they will make use of loans
through these funds in improving their business, business assets and take healthcare
markets of country to grow and revive. Or, can back Banks in providing loans to these
entities by its government securities, so that they do not hesitate in offering loans to
businesses which are part of failed markets. However, it must be noted by government
that loans which are acquired by these entities should be used in developing the business
only and not for clearing old dues of these businesses (James and et.al., 2018). Supply side Issues- In the countries like Sierra Leone, or any other developing country,
there are seen very few entities in the market that are involved in providing health and
related services to the people. These players then are seen taking best advantage of their
low number and dominant position. The most obvious issue related to supply side can
pertain to formation of cartels by these suppliers. In the Cartels, these players makes
common policies that are then seen ruling the market. Such as, policy regarding the

prices, suppliers fixes a common price in the market, above the level of market
equilibrium which affect the buying power of consumers and increase their out of pocket
expenditure. Demand side Issues- Demand side issues are those which are directly related with
expenditure of Households and Individuals in availing these services. These directly
affect the market sentiments of healthcare industry. Demand side issues in market of
Healthcare in Sierra Leone are mostly pertaining to low level of income level in the
country. Since the income of people are not sufficient they are not motivating businesses
to invest more, or suppliers to supply more. However, policies of suppliers are
continuously affecting the income of people. Inflation and Price stability- Inflation in its simple meaning is the rising prices of
products that are to be availed in the market. In general cases, prices of healthcare
products are decided by market forces of demand and supply, they meet at particular
quantity and price, and that is the stable price in the market (Simsekler and et.al., 2019).
But when prices gets fixed above to this level because of other factors, and situation of
excess demand arises, than Inflation is triggered. This had happened in Sierra Leone,
there is excess demand for health services, due to policies of suppliers and failed
government decisions, and prices are therefore higher. International Business and Trade- Now since, Healthcare markets are seen failing
badly, one option left with the government is to outsource the healthcare facilities from
international markets, from other countries where such market is developed. This could
be a very relevant option for Government, because this serves the benefits of service
provider as well, by offering them new markets. But it remains beneficial when
government is not keen to follow rigid policies. Government must frame such policies
where needs of people and needs of market both are served. And if it requires some
expenditure from government side, then it should be made available (Jackson and Jabbie,
2019). Economic growth and Balance of payment- Balance of payment is an account that
records all the incomes and receipts of Sierra Leone government of transactions made
with other countries. When, Government will be outsourcing healthcare resources from
other countries, it must agree on some wiser terms. As it is clearly noticeable that crisis

with government funding is also an issue with country. Therefore, government must not
go on getting trapped into a long term debt crisis, and becoming a failed state from a
failed market.

REFERENCES
Books and Journals
Greenlaw, S.A., Shapiro, D. and Taylor, T., 2018. Principles of Macroeconomics 2e (OpenStax).
Harcourt, G.C., 2019. The microeconomic foundations of macroeconomics. Routledge.
Jackson, E. A. and Jabbie, M., 2019. Understanding market failure in the developing country
context. In Decent Work and Economic Growth: Encyclopedia of Sustainable
Development Goals (pp. 1-10). Cham: Springer Nature Switzerland.
Jackson, E. A., 2019. Systemic health care failure as a symptom of Market Failure in Sierra
Leone. South African Journal of Public Health (October, 2019).
James, P. B. and et.al., 2018. Herbal medicine use among hypertensive patients attending public
and private health facilities in Freetown Sierra Leone. Complementary therapies in
clinical practice. 31. pp.7-15.
Shiu, A., Chow, J. and Watson, J., 2020. The effectiveness of animated video and written text
resources for learning microeconomics: A laboratory experiment. Education and
Information Technologies, 25(3), pp.1999-2022.
Simsekler, M. C. E. and et.al., 2019. Evaluating inputs of failure modes and effects analysis in
identifying patient safety risks. International journal of health care quality assurance.
Thampapillai, D.J. and Ruth, M., 2019. Environmental economics: Concepts, methods and
policies. Routledge.