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1.

Quiz in Hetar
#18 EMPAYNADO, AIRA LOUISE E.

Why is it difficult to pay for healthcare? Kindly explain via the diagram.!

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It is difficult to pay health care because as we can see in the diagram, most of the payments
will come from the Patients, or the consumer himself. In order for him to have health care
insurances coming from 3rd party payers such as PhilHealth or Caritas, consumers have to
pay them a certain amount of money (depending on the contract) to have a contract. Then
these 3rd party payers will pay doctors and hospitals so that the patient no longer has to get
money from his own pocket. The relationship of Doctors and Patients is simpler, since as we
all know, Medical treatments and medical knowledge of physicians are paid by patients from
his own pocket. Also, it is in the hands of the patients if he wants to let the 3rd party payers
to pay for the whole expense because some contracts are limited in amount of time, as well as
in cash.!

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2.

How does the government control the budget expenditures? Kindly be guided by the
following equation: AE= C+I+G!

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The Aggregate Expenditure is the sum of the Consumption, Investment and Government
Expenses. But we have some factors to consider, like the multiplier. The Multiplier is the ratio
of the changes in equilibrium level of output to the exogenous variables (factors assumed as
independent from the economic world.), it also indirectly affects the national income. In
simpler terms, an increase in income would cause changes in consumption, then will increase
AE. This effect is know as Marginal Propensity to Consume. Hence the higher the MPC, the
higher the multiplier, the higher the income. The multiplier is also useful when the income is
used not on spending, but rather on savings. The peso change in savings is called Marginal
Propensity to Save. Hence, the higher the MPS, the lower the multiplier, the lower the AE.!

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EMPAYNADO (2015)

3.

Describe Keynes Circular Flow Model.!

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It says that Households engage in Entrepreneurship thus making firms, that will soon offer
rents, wages, interest, profit, etc. to Households. Since these Households engage in
businesses, it will need Land, Labor and Capital, to continue the business, and these
businesses will know give and deliver goods and services to the Consumer. We call this
relationship Consumption. The Households and firms, will therefore save money in banks, in
order to have investments. Also, in order for the Governments to allocate funds for their
projects, Households and Firms must pay their taxes to the Government. And lastly, these
households and firms will now import dollar savings to the World, so that the World will
export earnings to Households and Firms.!

4.

How do we use Cost Benefit Analysis and Cost Effectiveness Analysis in prioritizing
maternal care programs? Give example scenarios.!

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Cost Benefit Analysis, compares the benefits of a chosen option against costs incurred with
option, thus the evaluation becomes a ratio. For example, Conducting Free Pre-Natal Care to
Future Mothers:!

NEEDS

COST

Purchase of Machines
(includes interest and taxes)

-20,000

Injections, Cotton, Gel, etc.

-3,125

Increased Revenue

27,520

Quality Increase Revenue

358

Reduced material costs (by bulk buying)

1,128

Reduced Labor Costs

18,585

Hiring Doctors

-8,321

Utilities

-250

Insurance

-180

TOTAL

15,715

Net Savings per Month ........................... 15,715!

EMPAYNADO (2015)

It means, that the government will benefit if they will conduct Free Pre-Natal Check Ups for
Future Mothers, since in order for them the Government to conduct this product, they have
to increase the revenue they get from the community.!

While the Cost Effectiveness Analysis, is the ratio of total cost over total health effect. An
example of this is using Barangay Centers, Door-to-Door Step or Health Clinics to distribute
Free Vitamins for future mothers.!

OPTIONS

NO. OF MOTHERS

TOTAL COST

COST EFFECTIVENESS
ANALYSIS

Barangay Clinics

35,000

3,500,000php

98.59php/Mother

Door to Door Step

55,000

8,430,000php

153.27php/Mother

Health Clinics

45,000

5,750,000php

127.77php/Mother

We can see that using Barangay Clinics is cheaper even if it can only serve 35,000 mothers.
Since we are talking about ratio here, even if the door-to-door step method served more
mothers from all of the options.!

5.

How do we utilize elasticity in understanding pricing decisions?!

Price elasticity of demand is defined as the measure of responsiveness in the quantity

demanded for products as a result of change in price of the same products. It is measured as
elasticity, which measures the relationship as the ratio of percentage changes between
quantities demanded of a good or product and changes in its price. We have three types of
Elasticity of demand which are Elastic demand, Inelastic Demand and Unitary Demand.!

Elastic Demand is one in which the change in quantity demanded due to a change in price is
large. Inelastic demand is one in which the change in quantity demanded due to a change in
price is small, while Unitary Demand happens when the percentage change in quantity is
equal to that in price, so a change in price will not affect total revenue.!

Elasticity varies among products because some products may be more of a necessity to the
consumer. Essential products are more insensitive to price changes because consumers would
continue buying these products despite price increases. While a price increase of a good or
service that is considered less of a necessity will deter more consumers because the
opportunity cost of buying the product will become too high.

EMPAYNADO (2015)