COMMUNITY MEDICINE III 1.

01
HEALTH ECONOMICS
October 8, 2019 | Jeriel R. De Silos, MD, MPM-HSD
Transcriber/s: 2A
BLUE - past trans GOAL OF HEALTH ECONOMICS
OUTLINE ● Pursue both EFFICIENCY and EQUITY
● Efficiency:
Constant resource → Maximum benefit
I. Introduction or
○ Economics Minimum resource → Constant benefit
○ Health Economics
1. Productive Resources PRODUCTIVE RESOURCES
2. Scarcity ● Many productive resources are considered by economists
II. Efficiency as MEASURABLE, and all of these can be expressed in
○ 3 Main Elements terms of MONEY.
1. Technical
2. Cost-effective
3. Allocative
○ 3 Major Analytic Techniques
1. Cost-effectiveness
2. Cost-utility
3. Cost-benefit
III. The Market
○ Market and Privatization
○ Market Demand
○ Market Supply
IV. Market Failure
○ Major Problems
1. Externalities
2. Public good
Figure 1. Productive resources.
3. Information asymmetry
4. Supplier-induced demand
(SID) Question:
5. Monopolies and In an economic sense, is money a productive resource or not?
incomplete markets
OBJECTIVES Answer:
1. Define Health Economics and other related terms NOT a productive resource
2. Discuss Economic Efficiency as to: ● Money is not considered by economists as a productive
a. Elements resources
b. Evaluation ● It is only used as a medium of exchange of productive
2. Discuss the concept of Market in terms of Supply and resources
Demand ● It can also be used to measure economic values
3. Explain the causes of Market Failure in health care
● These are when raw materials are selected and utilized for
I. INTRODUCTION
production (because resources can be subdivided into many
ECONOMICS
categories).
● One of the greatest issues in the country (eg. rice shortage,
inflation rate)
CLASSIFICATIONS OF PRODUCTIVE RESOURCES
● The study of how individuals and societies choose to allocate
1. Human resource – TIME AND ABILITY
SCARCE PRODUCTIVE RESOURCES among competing alternative
● Time is limited. Sometimes, it may not be possible
uses and subsequently to distribute the 'products' from these
to serve all patients with a limited amount of
uses among the members of a society.
time.
● Ability – proper allocation of health providers to
HEALTH ECONOMICS
the services needed by the patients. Some simple
● The study of how scarce productive resources are
conditions may require services by generalists
allocated among alternative uses for the care of sickness
while specialists cater to those with specific needs
and the promotion, maintenance and improvement of
that need their abilities to avoid wasting of time.
health.
● It further includes the study of how health care and health‐
2. Capital – FACILITY AND EQUIPMENT
related services, their costs and benefits, and health itself
● knowledge in general. In business, they have the
are distributed among individuals and groups in society.
concept of consultant-- these people ar selling
their knowledge or skills to a company. It has a
price
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 ● Specialized equipment need to be placed in the ○ Look at the producer's’ perspective.
tertiary hospitals while basic equipment should ● 3 → CONSUMPTION (DEMAND)
be present in primary level health facilities. ○ Look at the consumers’ perspective
3. Natural resources – has indirect influence
● Metals may not directly affect the way a doctor
handles his or her patients, but these may be THREE MAIN ELEMENTS OF EFFICIENCY
useful in the construction of facilities. 1. Technical efficiency – to save up on raw materials
● Water and food are also necessary. 2. Cost-effectiveness efficiency – to save up on production cost
4. Knowledge of production process – knowing how the with good quality and quantity
health system works in a given community. This will include 3. Allocative efficiency – to continuously satisfy demand of clients
the knowledge of where to refer patients or where the
specialized services located in the area. TECHNICAL EFFICIENCY
● Requires that for any given amount of output the amount of
SCARCITY inputs used to produce it is minimized.
● A fundamental problem facing all societies (and economists) is ● Alternatively, the requirement can be stated such that
that productive resources are INSUFFICIENT. maximum output is produced from any given combination of
● There are not and can never be enough resources to satisfy all inputs
human wants and needs. ● In general, there will be several technically efficient
● There is a constant conflict among alternative uses of productive combinations of inputs (for example, combinations of labor and
resources, and a constant need to choose among alternative capital) for a given level of output.
allocations. ● If this condition is not met:
● Assessed in terms of OPPORTUNITY COST. ○ Obtain more output through a different configuration of
○ Opportunity cost – the other outputs that must be given up resources.
in favor of a preferred output because productive resources To produce more outputs, we can reconfigure our resources
are committed to it like using catalysts in producing chemicals or use better
technologies to aid in the production of our outputs.
○ Release some of the resources to alternative uses without
sacrificing any current output.
○ Remove some of the insufficiencies and transfer those to
another production. For example, construction of a large
hospital in a small rural town.
● EXAMPLES:
○ Hospitals that are larger than they need to be to serve their
communities is an example of technical inefficiency.
○ Praziquantel 40mg/kg is comparable to 60mg/kg in treating
Schistosomiasis caused by S. japonicum
○ Non-MDR PTB treatment success in TB-DOTS centers is
comparable to tertiary hospitals
● TECHNICAL INEFFICIENCY = “OVERKILL”

*insert recording explanation here This is the reason why most business people resort to cost-cutting.
II. EFFICIENCY They want to utilize the least amount of input to produce a certain
● Measures how well resources are being used to promote social output. For example: Potency of drugs. Drug X can cure TB for 500 mg
welfare. of its dose. Another drug manufacturer was able to produce a drug
● “Get the most out of scarce resources”. similar to Drug X but can cure TB with the same effectiveness for
250mg of its dose. In terms of technical efficiency, the new drug is
The THREE MAIN ELEMENTS of Efficiency can be simplified as: better and more technically efficient than Drug X.
1. Do not waste resources.
○ In the production, usually there are wasted resources. COST-EFFECTIVENESS EFFICIENCY
There should be ways to minimize wastage. ● Takes into account the relative cost of different inputs
2. Produce each output at the LEAST cost. ● It requires that, in addition to technical efficiency being attained,
○ In the production, there is a need to use the least expensive inputs be combined so as to minimize the cost of any given
raw materials. output.
3. Produce the types and amounts of output which people value
most. “Before cost-effective efficiency is attained, technical
efficiency must first be achieved.”
An EFFICIENT ALLOCATION of resources is one which simultaneously
meets all three requirements. ● Alternatively, the requirement may be stated such that output is
● 1 & 2 → PRODUCTION (SUPPLY) maximized for a given cost.

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● For any given output in a particular setting, there will normally ○ Surgery in a well-known teaching hospital vs same surgert
be only one combination of inputs that will be cost‐effective. done by the same surgeon in another almost unknown
● Cost-effectiveness can be measured by comparing all possible hospital
combinations of inputs used for the same purpose. ○ Taking a drug to treat allergy four times a day vs a more
● While cost‐effectiveness can inform the question of how to expensive alternative to be taken once a day
produce an output at least cost, it does not address the question
of whether the output should be produced In common language, then, efficiency means both “DOING THINGS
RIGHT” (technical efficiency and cost‐ effectiveness – ensuring that
● EXAMPLE: production will lead to the right product), and “DOING THE RIGHT
○ If labor is abundant and inexpensive relative to capital in THINGS” (allocative efficiency – ensures the products are intended for
one economy compared to another, then least‐cost the proper end-user).
production methods will employ relatively more labor in
the first economy. Reason for producing products in China SO, HOW DO WE ANALYZE EFFICIENCY?
because cost of labor in China is cheap.
○ Strategy of Apple: they jump up the use of their products ECONOMIC EVALUATION
and they claim that their product is high quality. They claim ● Defined as the comparative analysis of alternative courses of
that the product is “matibay, maganda, etc.” therefore action in terms of both their COSTS and CONSEQUENCES
many people will buy. (Drummond et al., 1997).
○ A 50 peso per tablet Amoxicillin 500mg vs a 5 peso tablet ● Both costs and consequences are required for a study to be
Amoxicillin 500mg to treat an infection considered a full economic evaluation.
○ Cost of surgery in a tertiary private hospital vs cost of the
same surgery done by the same surgeon in a government
training hospital

For example, in car production, Henry Ford pioneered the mass

production of cars by introducing the use of an assembly line. Imagine
constructing a car without the use of an assembly line. To do that, we
have to hire a lot of people to construct just one vehicle, thus technical
insufficiency. On top of that, to compensate for the labor of these Figure 2. Consider and compare both consequences and costs for
people, money is required. The more people hired by the company, the producing outputs for program A and program B.
higher the expenses that the company needs to pay, hence cost-
effectiveness inefficiency. With the use of an assembly line, more
outputs can be produced with the use of a small amount of resources
used at a lower cost. Exercise:
1. A primary care center reports its annual performance in terms
of costs, cases treated by type, cases successfully resolved and cost
ALLOCATIVE EFFICIENCY per successful case.
● It requires that in addition to the achievement of technical
efficiency and cost‐effectiveness, resources be used to produce Is this a full economic evaluation? (Yes/ No)
the types and amounts of outputs which BEST SATISFY PEOPLE ● ANSWER: No
(i.e. which people value most highly). ● Reason: No comparison was done vs. alternatives. The
● It is possible for an allocation of resources to be both technically primary care center only presented the performance of
efficient and cost‐effective but allocatively inefficient if their services.
producers are supplying too much or too little of any good or
service relative to consumers’ wishes. 2. Doing a clinical research involving the efficacy of drugs and
○ There is surplus with too much supply therefore medical interventions.
products may go to waste. With very little supply,
price may be too high or only a few may be able Is this a full economic evaluation? (Yes/ No)
to utilize the product. ● ANSWER: No
● EXAMPLE: ● Reason: Analysis focused on the technical efficiency only
○ If mothers of young children want counselling services for (cost was not considered).
behavioral problems instead of frequent well‐child
checkups, then allocative efficiency might be improved by
changing the mix of primary care services even if the well‐ 3 MAJOR ANALYTIC TECHNIQUES
child examinations were being provided cost‐effectively. Table 1. Comparison of the three major analytic techniques.
○ Iphone example: Apple offered free replacement of
batteries to satisfy their customers.
○ Another example of Iphone: They offer new updates for the
phone to satisfy their customers.

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 because of the treatment itself and a gradual decline in health over
that time. If individuals valued the first 10 years at 0.75 on the above
0-1.0 scale, and the last 5 years at 0.50 on the same scale, then what
is the QALYs generated by dialysis?

QALYs = ∑ (years of life added x value weight)

= (10 years’ x 0.75) + (5 years x 0.50)
= 7.5 years + 2.5 years
= 10 years
*∑ - summation

COST BENEFIT ANALYSIS (CBA)

● In CBA, the consequences are measured and valued in monetary
units, most commonly by asking relevant individuals HOW
MUCH THEY WOULD BE WILLING TO PAY TO OBTAIN THE
CONSEQUENCES: HEALTH IMPROVEMENT.
COST EFFECTIVENESS ANALYSIS (CEA) ● Frequently done using a method called CONTINGENT
● The costs, measured in money terms, are compared to the VALUATION.
consequences in the physical units of effectiveness that are ○ What a person would hypothetically pay if they could
natural to the program. achieve the benefits from specific interventions.
● Cost-effectiveness analysis addresses cost-effectiveness ○ In other words, it is the willingness to pay for improvement
efficiency. care (Shogren et al., 1994; Donaldson, 1999
● Example: Malaria Program ● In CBA, both the costs and the consequences of a program are
○ A malaria prevention program might be evaluated in terms measured in the same units, [Link] units.
of the cost per case of malaria prevented. ● CBA is the only technique that can determine in and of itself
○ Malaria treatment programs would be compared in terms whether a program is worth doing (benefits exceed the costs,
of the cost per case of malaria cure or cost per malaria generating positive net benefit).
death averted. ● It allows the COMPARISON OF HEALTH AND NON HEALTH
● To make these broader comparisons, a common ‘currency’ for PROGRAMS (eg. malaria prevention vs dialysis program vs
measuring consequences is needed. scholarship program for junior high school teachers vs
○ This is possible by using cost-utility analysis and procurement of sea ambulance). Therefore, it is the only type
cost benefit analysis instead. used to compare those with different inputs and outputs.
● CEA can only assess alternatives with similar consequences.

WHEN TO USE CEA, CUA & CBA?

Question: ● CEA
Using the previous example, is it possible to compare the malaria ○ Compare programs that have homogenous or similar
program with the EPI program, [Link] health program, or outcomes and where there is a clearly dominant
the kidney dialysis and transplantation program using CEA? outcome of primary interest.
● CBA or CUA
Answer: ○ When there are multiple outcomes or when there are
No. CEA can only assess alternatives with similar consequences (in significant consequences related to both quantity and
this case, addressing malaria) quality of life.
● CBA
○ When there is a need to compare using monetary units
COST UTILITY ANALYSIS (CUA) ● CUA
● In CUA, the consequences are measure in QUALITY-ADJUSTED ○ When there is a need to compare using QALYs
LIFE YEARS (QALYs), or the quantity of life years added by a
health care program and the quality of life resulting from
treatment. III. THE MARKET
● A QALY is calculated by multiplying the number of life years ● A system, process or entity wherein players engage in exchange
added by a program by a STANDARDIZED WEIGHT BETWEEN 0 of goods or services.
TO 1.0 where 0 = immediate death and 1.0 = perfect health for a ● For a market to function, three components are needed:
defined time period. 1. Trading of goods and/or services.
Standardized weights are usually derived from surveys. 2. Two independent players (consumers (“buyers”) and
producers (“sellers”
EXAMPLE: 3. The price of goods and/or services
Suppose that a dialysis treatment program extends life by 15 years, o Demand - consumer’s willingness to pay
but the quality of life of an individual receiving dialysis suffers both o Supply - producers’ willingness to produce

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 ● A market is simply the result of the interaction of supply and DEMAND
demand ● Desire and ability to pay a price for a given good or service
● In a COMPETITIVE MARKET….
o A large number of producers compete with each other to ● NEED vs WANT:
satisfy the wants and needs of a large number of ○ Need – required for survival (medicines and vaccines)
consumers. ○ Want – a felt need that is not necessary for survival (Wifi,
o Producers aim to make optimal use of resources. mobile data)
● When someone NEEDS SOMETHING and is willing and able to
pay for it, then that 'need' is translated into EFFECTIVE DEMAND.
9 CONDITIONS FOR COMPETITIVE MARKETS ● But if they WANT SOMETHING (i.e. iPad Pro) and are unwilling or
Buyers/ Clients unable to pay for it, then suppliers of iPad Pros have no
1. Able and willing to pay customers and a market for iPad Pros cannot exist.
2. Informed
3. Rational “Demand becomes EFFECTIVE when customers come forward and
4. Time to shop express their wants in a WILLINGNESS and ABILITY TO PAY”
Goods/ Services
5. Homogenous (similar) inputs and quality
Question:
6. Price known in advance
What will happen if people need something that they think is
Producers/ Suppliers
necessary but unable to translate it into an effective demand?
7. Many sellers
8. Free entry
Answer:
9. Free exit
Competitive markets will NOT supply these people with the
services they need without special provisions. This happens in poor
● Here, we do not want monopolies. There needs to be a
communities Markets will only operate if people can translate their
large number of consumers.
needs into effective demand through an ability to pay.
● Free entry - no one in the producers’ side should prevent
newcomers
Hindi matatawag na effective yung demand kung walang may
● Free exit - for those who became bankrupt in the market
kayang bumili. Kung walang bibili, walang magbebenta.
MARKETS AND PRIVATIZATION
Question:
PRIVATIZATION
From an economic perspective, how can the market
● process of transferring ownership of formerly public
accommodate the needs of the poor?
enterprises, organizations or agencies to the private sector
Answer:
● In a SEMASHKO SYSTEM, the public sector takes full
Special provisions can be put into place to help the poor translate
responsibility for the country’s health goods and services
their needs into effective demand:
○ Market is non-existent
● Government can pay for the needs of the poor
○ Privatization is not possible
● A non-government sponsor can pay for the needs of the
○ Options or variations is little
poor
● In a BEVERIDGE or BISMARCKIAN SYSTEM, governments:
○ Increase the role of the private sector in the PROVISION of DEMAND CURVE
health goods and services ● Simply a plot of demand vs price
○ Retains considerable responsibility and control over the
means to finance those health goods and services Must fulfill 3 things:
○ Markets for health provision do prevail, or are being 1. Quantify how much of a good or service people want—and
stimulated, as when governments 'sub‐contract out' will demand—at different prices;
2. Get real data from functioning markets and record how
● In a DECENTRALIZED SYSTEM, governments: demanded quantities increase or decrease, as prices
○ Make greater use of the private sector to provide health increase or decrease;
goods and services 3. Plot the data to make the actual demand curve.
○ May actually decide to reduce the number of public
providers they manage and fund by selling these to a ELASTICITY OF DEMAND - the rate at which the quantity of a good or
private sector group who will: service changes with a change in price.
▪ Manage them; ○ Elastic - if demand changes a lot when the price increases
▪ Put them into competition with other hospitals; ○ Inelastic - if demand changes only slightly when price
▪ Sustain their operations through revenue earned. increases

MARKET DEMAND

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PRICE ELASTICITY OF DEMAND - method of quantifying the rate of 1. Lower its price (this would not shift the demand curve! It
change in demand that accompanies a change in price. would only move the demand towards the right, along the
○ Elastic - if demand changed a lot when the price increases initial curve);
(>1.0) 2. Lower the price of a complement;
○ Inelastic - if demand changes only slightly when price 3. Increase the price of a substitute;
increases (>1.0) 4. Increase tastes for the good and service.

MARKET SUPPLY
● Private sector producers supply goods and services as a way of
making a living and/or generating as much surplus or profit as
they can.
● PROFIT
○ Any money a producer/supplier gets to keep from
the sale of a good or service after all costs to
produce the good or service are met.
● If a private producer/supplier fails to sell a good or service at a
profit, they can go slowly or quickly bankrupt.
● Goal: minimize production cost to earn profit

SUPPLY CURVE
● Simply a plot of supply vs price
● Must fulfill 3 things:
1. Quantify how much of a good or service producers are
willing to supply at different prices;
2. Get real data from functioning markets and record how
supply quantities increase or decrease, as prices increase or
decrease;
3. Plot the data to make the actual supply curve.

Figure 2. The demand curve. Demand = boxes of medicines. Figure 3. Supply is the reverse of demand.

Interpretation: ● ELASTICITY OF SUPPLY - the rate at which the quantity of supply

● The demand will shift to this direction (to the right and changes with a change in price.
upwards) when there is/are: ○ Elastic – If supply changes a lot when the price increases
1. More consumers
2. Increase in the income of consumers ○ Inelastic – If supply changes only slightly when price
3. Increase in the consumer taste increases
4. Increase in the substitutes and competitors
5. Decrease in the price of complements (e.g. a drop in oil ● PRICE ELASTICITY OF SUPPLY – method of quantifying the rate
price (the complement) can increase the demand for cars) of change in supply that accompanies a change in price.
○ Elastic – If supply changes a lot when the price increases
● If you want to increase the demand for a good or service: (/x/>1.0)
○ Inelastic – If supply changes only slightly when price
increases (/x/<1.0)

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 demand is high, supply is not directly influenced. If demand is high,
asking price decreases. If demand is high but supply is not, cost
decreases (because people look for alternatives where cost is
reduced). If demand is high, there is no way to reduce it because the
consumers are the ones asking for it, so the plan is to increase the
supply to the amount of demand needed to achieve equilibrium.
● If you want to increase the supply of a good or service:
Sometimes, demand or supply may be difficult to alter therefore the
1. Increase its price;
government may intervene. However, the “invisible hand” should
2. Reduce costs of producer inputs;
actually work without the help of the government, and intervention
3. Invent new technologies that yield more output per input.
only comes in when the need arises.

● Purpose of superimposing the supply and demand curve

○ Because economists want to look into the equilibrium price
and quantity
○ Laissez-faire/Invisible hand
● Equilibrium price and quantity
○ location in the graph wherein the acceptable demand and
acceptable level of supply will meet

IV. MARKET FAILURE

● When any of the nine conditions for competitive markets
are weakly represented or not in place at all, we have
reason to expect that markets will fail to perform optimally
by allocating resources efficiently.
● Caused by these MAJOR PROBLEMS:
Figure 4. The supply curve is usually directly proportional with the
1. Externalities
price.
2. Public good
3. Information asymmetry
Interpretation:
4. Supplier-induced demand (SID)
The supply will shift to this direction (to the right and downwards)
5. Monopolies and Incomplete markets
when there is/are:
1. More suppliers
EXTERNALITIES
2. Decrease in the cost of inputs
● Situations where decisions of consumers or producers have
3. New technologies that permit more production at the same
an impact on a third party
input cost
● POSITIVE – favorable impact
○ e.g. immunization – can benefit even those
● More suppliers = more competition = cheaper cost of goods!!!
without vaccines through HERD IMMUNITY
Kasi if hindi bababa yung price ng isang supplier na katulad
○ Suppliers will no longer produce these items
with the other suppliers in the market, walang kukuha ng goods
because some people can choose not to buy their
sa kanya kasi it’s available ng cheaper sa ibang supplier.
products or services.
● NEGATIVE – harmful impact.
○ e.g. smoking – can harm non-smokers through 2nd
SUPPLY AND DEMAND CURVE
and 3rd hand smoke
○ More people will get smoking-related illnesses
which in turn can increase the demand for
services.

PUBLIC GOOD
● Goods from the consumption of which no one can be
excluded and the consumption is non-rival
○ If person A consumes this good, the consumption
of it by person B is in no way reduced.
○ Examples:
■ AM/FM radio
■ Drinking water
■ Clean air
■ Public sewage system
Figure 5. “Correction” of price means that there is equilibrium (green
circle in the middle). There is both acceptable demand and supply. If

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 ● The market will typically not produce the good because of 1. Doctors are at liberty to set their fees as high as they want—
the problem of FREE RIDERS (people who do not pay but patients have no choice but to pay if they want treatment
still enjoy the benefits). because there are no alternatives.
2. There are no incentives for doctors to provide high‐quality
INFORMATION ASYMMETRY services in order to retain their patients, for the same
● Case where the provider of the service knows more than reason that patients have nowhere else to turn to.
the consumer about the good or service applied. 3. The patients have no market power and cannot force
● Consumers of health services face the problem of not being physicians to perform better, more, and at lower prices.
fully aware of all treatment options that are available for
their complaint. ISSUES IN FREE ENTRY
● Therefore, rely on the physician to choose the appropriate 1. In the case of health markets, this condition is usually not
treatment on their behalf. present, since physicians are required to be licensed by a
professional association or by the government.
2. Medical education, including specialized trainings are very
AGENCY long.
● Asymmetry of information leads to a relationship of agency. 3. The long duration of the training and the licensing puts a
● Agency - situation which arises whenever a principal (a barrier at the entry point in the market.
patient) delegates decision‐making authority to another
party, the agent (physician), who is expected to provide the
lacking information. ISSUES IN INCOMPLETE MARKETS
● There is a CONFLICT OF INTEREST, since the agent is also 1. This happens when, for instance, in very remote areas,
the provider or “seller” of goods or services. there is either not enough demand to sustain a market or
● In the demand curve, when the demand shifts to the right, there is not enough supply, or both.
the price increases. 2. In these incomplete markets the government or other
● In the supply curve, when the supply shifts to the right, the altruistic providers will often step in to alleviate this
price decreases. situation and provide basic services.
● Can lead to MORAL HAZARD, or the possibility of one of the
parties to change its behavior to its own benefit and usually
at the cost of the other party. REFERENCES

SUPPLIER-INDUCED DEMAND (SID) 1. References

● Takes place when physicians prescribe more treatment 2. Books
than is strictly necessary, taking advantage of the gap in TRANSCRIBERS
information between themselves and their patients. 1. TRANS GROUP: 2A (KMB, DAD, NBO, JCS, GAR, JT)
● Example: advising a patient to undergo Cesarean Section 2. SUBTRANSHEAD: MJJ
even in the absence of justifiable indications. 3. EDITOR:
4. TRANS HEAD:
MONOPOLIES AND INCOMPLETE MARKETS
9 CONDITIONS FOR COMPETITIVE MARKETS
PAST-E 2019
[Link] economics, resources are said to be:
BUYERS/CLIENTS GOODS/SERVICES PRODUCERS/ a. Scarce
SUPPLIERS b. Infinite

1. Able and 5. Homogenous/ similar 7. Many sellers* [Link] is an example of _________ resource:
willing to pay inputs and quality 8. Free entry* a. Natural
2. Informed 6. Price known in 9. Free exit b. Production Process Knowledge
3. Rational advance c. Capital
4. Time to shop [Link]

[Link] is an example of _______ resource:

a. Production Process Knowledge
b. Human
c. Capital
d. Natural
*In healthcare, these 2 are often not fulfilled, especially in poor areas.
44. Raw Aluminum is an example of ______ resource:
ISSUES IN SUPPLY (MONOPOLISTIC SETTING)
a. Natural
b. Capital

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c. Human 54. The market demand is said to be ______ if demand changes a
d. Production Process Knowledge lot when the price increases
a. Inelastic
45. The most recent treatment guideline for a disease is an b. Elastic
example of ________ resource:
a. Human 55. When the absolute value of the computed ELASTICITY OF
b. Natural DEMAND (/x/) is > 1.0, it is said to be:
c. Capital a. Inelastic
d. Production Process Knowledge b. Elastic

[Link] that are larger than they need to be to serve their 56. When the absolute value of the computed ELASTICITY OF
communities is an example of ________ SUPPLY (/x/) is < 1.0, it is said to be:
a. Allocative Efficiency a. Elastic
b. Cost-Effectiveness Efficiency b. Inelastic
c. Technical Efficiency

47. _______ occurs when there is an optimal distribution of goods

and services with respect to the consumers’/ people’s
preferences.
a. Allocative Efficiency
b. Cost-Effectiveness Efficiency
c. Technical Efficiency

48. Setting up pharmaceutical laboratories in countries with cheap

labor is an example of _____:
a. Cost-Effectiveness Efficiency
b. Technical Efficiency
c. Allocative Efficiency

For nos. 49-51. For each scenario below, determine which are
examples of economic evaluation.

49. Doing a clinical research involving the efficacy of drugs and

medical interventions.
a. Not an example of an economic evaluation
b. Example of an economic evaluation

50. A primary care center reports its annual performance in terms

of costs, cases treated by type, cases successfully resolved and
cost per successful case:
a. Example of an economic evaluation
b. Not an example of an economic evaluation

51. Analyzing various Tuberculosis program activities in terms of

cost and success rates.
a. Example of an economic evaluation
b. Not an example of an economic evaluation

52. In Cost Effectiveness Analysis, the COST is measured in terms

of:
a. QALYs/ DALYs
b. Physical Units
c. Money

53. Cost Utility Analysis’ CONSEQUENCE is measured in terms of:

a. Money
b. Physical Units
c. QALYs/ DALYs

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