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WHAT IS ECONOMICS
- QUEEN OF THE SOCIAL SCIENCES
- -Economics is unique in analyzing various areas
of human behavior. It utilizes different tools and
methodologies in analyzing and solving social
problems, compared to the other social
sciences.
- -Greek word ‘oikonomia’ , which means the
management of a family or household.
Definitions of Economics
“Economics is “the study of the proper allocation and
efficient use of scarce resources to produce commodity
for the satisfaction of unlimited needs and wants of man.”
Adam Smith’s Wealth Definition
- .
Alfred Marshall’s Welfare Definition
- be?
. (APPLICATION)
Lionel Robbins’ Scarcity Definition
- .
Paul Samuelson’s Growth-Oriented Definition
- .
II. Importance of Studying Economics
1. Understand how goods or resources are produced
and properly allocated to society.
2. Understand the behavior and roles of the different
individual decision-makers: the households, firms, and
the government.
3. Explain how the national or global economy operates.
4. Know the forces that affect the dynamics of any
market.
5. Understand economic issues and trends
III. BRANCHES OF ECONOMICS
a. Microeconomics
- -Microeconomics is the branch of
Economics that is concerned with the
behavior and decision-making of the
individual players in the economy, such
as the consumers, businesses, and
the government
b. Macroeconomics
- -Macroeconomics is focused on the
overall structure and performance of
the national or global economy. It is
concerned with the analysis of
aggregates or the economy as a
whole.
HEALTH_ECON.\ChristineJoyS.E. (III-BS ND-B)
IV. Methodologies of Economics
Positive Economics
- -refers to the analysis of economic behavior that
uses economic theory and empirical analysis to
explain what is or what happened.
- -It seeks to predict and explain economic
phenomena and describes facts and data in the
economy.
Normative Economics
- It incorporates ethics and value judgments
about what the economy should be like or what
particular policy actions should be
recommended to achieve a goal.
- -It seeks to answer the question, what ought to
IDENTIFY WHETHER THE FOLLOWING STATEMENTS
ARE NORMATIVE OR POSITIVE: APPLICATION IV.
Methodologies of Economics
1. The GDP of the Philippines is lower than that of
Singapore in 2018.
2. Every Filipino ought to have equal access to freedom
of expression.
3. The Philippine government should not tax online
businesses.
4. If the government cuts taxes, then the supply of
cigarettes will rise.
5. It is right to spend on social works more than the
public works.
1. To regulate health care expenditure of the country, the
Philippine government should implement the national
health program similar to that of developed countries like
United States, United Kingdom, and Canada.
2. Environment Protection Agency study shows that
exposure to second-hand smoke causes 3,000 lung
cancer deaths per year in nonsmokers.
Basic Economic Concepts
1. Wants versus Needs
2. Goods and Services
3. Economic Resources
• The economic fact of life stresses that wants are
unlimited, but the resources available to satisfy them are
scarce.
Wants Versus Needs
• Wants are desires or unnecessary things that can be
fulfilled by consuming a good or service.
• Needs refer to the things that are vital for survival like
food housing, and clothing. • It also include things that
people need to have in order to live a healthy and happy
life like education, transportation, medical care, and job
security.
Goods and Services
GOOD a tangible commodity that is used to satisfy
human wants, which can be purchased and consumed.
MEDICAL GOODS
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- blood pressure monitoring equipment, ECG
machines, vitamins, anti-depressant drugs
SERVICE Goods and Services -It is the intangible
equivalent of a good that also brings satisfaction to
human wants. Services are activities or tasks that people
provide for others’ demands.
MEDICAL SERVICES
Like maternal care, home for elderly persons
V. Economic Resources
1. LAND
- This refers to naturally occurring
materials of the Earth that are used for
the production of goods and services.
- This is the physical space or area on
which production takes place.
- RENT
2. LABOR
- It refers to the time, physical and
mental skills that people contribute in
producing goods and services.
- Nurse
- WAGE
3. CAPITAL
- This covers the tools and other
productive equipment utilized in
producing consumer goods and
services
- -Financial capital, assembly plant,
factory building, distribution facilities,
computers
- INTEREST
4. ENTREPRENEURSHIP
- This is the human resource
responsible for combining
organizing the land, labor, and capital
resources into a good or service.
- Specialist form of labor input
- PROFIT
Patients with cardiac pathology normally go to a hospital
to see a cardiologist. Usually, in practice we ask for an
appointment from a receptionist before the cardiologist
could look into the patients’ complaints and he might use
medical instruments such as stethoscope to listen to the
heart beats before prescribing proper medication to treat
a specific disease.
V. BASIC ECONOMIC PROBLEMS
1. WHAT TO PRODUCE AND IN WHAT
QUANTITIES?
2. HOW TO PRODUCE?
3. FOR WHOM TO PRODUCE?
1. WHAT TO PRODUCE AND IN WHAT 1
QUANTITIES?
Scarcity - a situation where there is an insufficient or
limited amount of resources available
“There is no such thing as a free lunch.”
-every choice entails costs. These costs may take in the
form of time, money, or something that is valued.
OPPORTUNITY COST
Scarcity and Rational Choice
Choices are necessary because resources are scarce.
● Opportunity Cost
- In economics literature, the act of giving up one
thing in order to get something else is called
TRADE-OFF
- Boyes (2008) defined OPPORTUNITY COST
as the highest-valued alternative that must be
forgone when a choice is made.
The first problem deals with ALLOCATIVE EFFICIENCY,
or the condition in which the optimal amount of output is
produced given the underlying structure of social benefits
and costs.
2. HOW TO PRODUCE?
This question involves decisions about what production
methods or techniques to use and how economic
resources are to be combined in producing the final
output.
Goods and services must be produced with a minimum
input without sacrificing the quality
Production Efficiency
- Production efficiency refers to a condition in
which one activity either production or
consumption cannot be increased without
reduction on another activity because the
maximum amount of output is produced from a
finite amount of inputs.
3. FOR WHOM TO PRODUCE?
- The last question involves decisions on how
or goods and services are distributed among
members of society.
- Equity
THE CONCEPT OF HEALTH
O1 DEFINITION OF HEALTH
- It comes from the word “heal”, which connotes
the totality or the wholeness of a person such
as his physical, mental, social, emotional,
spiritual, and sexual aspects.
HEALTH = HEAL = THE TOTALITY
According to who,
Health refers to “a state of complete physical, mental,
and social well-being and not merely the absence of
disease or infirmity.”
HOLISTIC VIEW OF HEALTH
1. PHYSICAL HEALTH

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- Physical health refers to the way our body
functions. This includes being free from disease
or sickness and being at your recommended
body weight.
- How do you take care of your Physical Body?
-
2. Mental health
- Mental health refers to a state of
well-being in which every individual
realizes his or her own potential, can
cope with the normal stresses of life,
can work productively and fruitfully,
and is able to make a contribution to
his/her community.
- MISCONCEPTION ABOUT MENTAL
HEALTH CONDITIONS
3. EMOTIONAL HEALTH
- Emotional health pertains to the
capability of an individual to express
his own feelings and develop personal
relationship with other people.
- Individuals with good emotional health
must be able to get along with others
and express their emotions in a
positive and nondestructive way
4. SOCIAL HEALTH
- Social health is the quality of your
relationships with friends, family,
teachers, and others you are in contact
with.
- Emphasis on Social Relationships and
having a strong social support
02 THE ASPECTS OF HEALTH
5. SPIRITUAL HEALTH
- This refers to an individual’s capacity
and ability to express his spiritual
maturity and moral integrity.
- Spiritual health is maintaining
harmonious relationships with other
living things and having spiritual
direction and purpose.
- This includes living according to one’s
ethics, morals, and values
6. SEXUAL HEALTH
- Sexual health refers to the capacity of
an individual to accept his or her
sexuality, including his or her gender
preferences.
03 OBJECTIVE OF HEALTH
Wellness
- Wellness refers to the achievement of a
person’s best in all six aspects of health.
- This is the goal because it is impossible for
everyone to be ever completely healthy or
unhealthy.
THE ASPECTS ARE INTERRELATED
Dimensions of health
HEALTH_ECON.\ChristineJoyS.E. (III-BS ND-B)
1. Biological aspects
- This concerns our individual
responsibility in keeping ourselves
healthy.
2. Environmental foundation
- -refers to the natural and God-given
gift to his creatures.
3. Societal foundation
- the society has a major role on how to
ensure the health of the people by
means of proposing and passing laws
to protect the environment
04 DETERMINANTS OF HEALTH
In determining one’s health, social scientists and other
experts including medical practitioners identified some
factors that affect one’s health.
1. THE ROLE OF GENDER
- Gender refers to the sexual orientation of an
individual.
- Gender role is defined as a set of behavioral
norms associated with males and females,
respectively in a given social group or system.
- In general, women are more responsible in
taking care of their health but in some areas,
gender becomes the basis of the privileges of
health care.
- Women find themselves in subordinate
positions to men and are socially, culturally, and
economically dependent on them.
- MEN: They are more likely to be involved in
road crashes or occupational accidents as they
are more likely to be outside of the home or in a
workplace than women
2. ENVIRONMENTAL AND HEALTH
- Environment refers to the aggregate of all
external and internal conditions affecting the
existence, growth, and welfare of organisms.
- Life could originate and flourish on earth only
because the environment of this planet
provides the necessary conditions that all
living things would survive like microbes,
plants, animals including man.
Environment is the sum total of all the biotic (living) and
abiotic (non-living) factors that surround and potentially
influence an organism.
3 COMPONENTS OF ENVIRONMENT
1. Physical component
- This refers to the energy of one form
or another. Under this component, we
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could talk about physical hazards like 5.

Since the efforts of the government alone are
global warming, radioactivity, and often inadequate, collaboration between the
electromagnetic radiation which all public and private sectors are necessary.
have their adverse effects on our Public & private collaboration
health.
2. Chemical component
- -It refers to anything that occupied
space, that is, matter.
- -Chemical risks to health: For instance,
in order to produce electricity,
combustion of coal and other fossil
fuels are necessary
3. Biological component
- This refers to the living things including
man. Biological hazards can be
divided into 2 broad categories such 6. . Government expenditure on health
as: - As seen in global statistics, poor countries tend
- a. Biological components which to have worse health outcomes. This is
produce adverse health effects through because poverty and ill-health are intertwined,
infection. Ex: Water contaminated with in fact, their relationship is double-edged one
disease causing organisms such as
cholera and pathogens like “coliform
bacteria”
- b. Biological components which
produces adverse health effects in
non-infective or allergic ways.
3. Income and health
For one, a person’s income can either increase
or lower his/her chance to access and afford
health services.
This is why individuals belonging to the low
income bracket heavily rely on public health
services rendered by the government and other
non-government organizations (NGOs).
4. occupation and health
Occupation or employment provides not only
income, but also a sense of purpose, a daily
schedule, physical activity, social contacts, and
a social identity. While in general, employment
positively influences health, it may also cause
harm to our body. M3: HEALTH ECONOMICS
- Health economics is the application of
Hazards in the workplace
economic theory, models and empirical
1. Physical Element: It refers to ionizing
techniques to the analysis of decision-making
radiations (i.e x-rays, gamma rays,
beta particles, etc.), Non-ionizing by individuals, health care providers and
radiation (such as microwaves, governments with respect to health and health
infrared, visible, and ultra-violet lights), care. (Morris, Parkin & Spencer, 2012).
and Ergonomic (such as posture, - Health Economics also refers to the study of
movement, and load bearing) proper allocation and efficient utilization of
2. Chemical Element: It refers to organic health resources for the improvement of health
elements like solvents, resins, and where resources are limited and wants are
fluxes, and Inorganic elements like potentially unlimited
lead and arsenic silica.
3. Biological Element: It refers to
II. IMPORTANCE OF HEALTH ECONOMICS
allergens of biological origin (insects,
mites), infections (tuberculosis,
brucella, leptospira), and viruses 1. There is scarcity of health resources. -
(Hepatitis B). - Where there is scarcity and choice, there are
4. Psychological Element: This refers to costs. OPPORTUNITY COST
the different stressors that may affect - Hence, the primary objective is to ensure that
your health. Examples are the people most beneficial activities are selected among
you are working with, and the type of the available health resources.
your job. 2. Health Economics promote efficiency and equity

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- it provides set of analytical technique that

assists decision-making and promotes
efficiency and equity
3. It provides answers to the 3 basic economic problems.

CONCEPTS IN HEALTH ECONOMICS

1. SCARCITY & CHOICE
Societies inevitably make decisions on how to allocate
the available resources to the production of health
services and how to distribute the health services ● All points within the curve are considered
produced to those who needs and wants them. efficient because the output is produced from
2. OPPORTUNITY COST & TRADE-OFF available resources.
- Opportunity cost is defined as the benefit that ● Points outside the ppf are unattainable.
must be forgone by not allocating the resources ● Point inside the ppf are inefficient because the
to the next best activity. economy is not fully using its resources.
- Trade-off refers to the situation in which more
of one good thing can be obtained only by
giving up another thing.
3. THE PRODUCTION POSSIBILITY FRONTIER (PPF)
The Production Possibilities Frontier (PPF) is a graphical
model that illustrates the combinations of output the
economy can efficiently produce using the available
quantity of economic
resources.
- The PPF
illustrates
the concepts
of scarcity,
choice, and
________________________________________________________
opportunity
GRAPHS IN ECONOMICS
cost.
Rectangular Coordinate System / Cartesian Coordinate
- NOTE:
-is based on a two-dimensional grid, every point
Production
on the plane can be identified by unique 𝑥 and 𝑦
Possibility
coordinates.
Curve
Ordered Pair (𝒙-coordinate, y-coordinate)
ASSUMPTIONS IN THE PPF
Quadrant I, II, III, IV
1. FIXED RESOURCES
- the quadrant I is the most frequently used
- The quantity of factors of production (land,
quadrant because much of the economic data
labor, capital, and entrepreneurial ability cannot
require positive numbers. -Examples are the
be adjusted.
price of a product, the quantity demanded and
2. FULL EMPLOYMENT
supplied, national income
- The economy is at its full capacity using all
available resources without waste.
3. TWO GOODS/ SERVICES PRODUCED
4. FIXED TECHNOLOGY
- The state of technology remains unchanged.

3. THE PRODUCTION POSSIBILITIES FRONTIER MODEL

(PPF)

ECONOMIC RELATIONSHIP

1. DIRECT RELATIONSHIP
>Positive relationship

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>The graph is illustrated by a curve that slopes upward or
an Upward sloping line.
Grossman model of intertemporal consumption choice
• Health is considered as a personalized capital good
- which may grow through investments
• The higher your health capital, the less chance you will
have to deal with illness later in life.

M4: DEMAND
● PRICE
Price is the amount of money a consumer pays for a
2. INVERSE RELATIONSHIP good
>Negative relationship ● QUANTITY DEMANDED (QD)
>the graph is illustrated by a curve that the amount of good that a consumer is willing
slopes downward from left to right or and able to buy at a specific price.
downward sloping line.

The law of demand states that quantity demanded varies

inversely with price, ceteris paribus.

CETERIS PARIBUS
Other determinants/ factors remain constant.
-ex. Population is constant, no increase/ decrease in
income.

JUSTIFICATION FOR THE LAW OF DEMAND

1. INCOME EFFECT
-At a lower price, the consumers have a greater
PURCHASING POWER.
2. SUBSTITUTION EFFECT
-In case the price of goods or services that the
consumers buy increases, they look for substitutes with
a lower price.

M4: DEMAND
DEMAND
- Demand represents the goods or services that
people buy.
For most economists, demand refers to the quantity of
goods or services that consumers are both willing and
able to purchase at certain conditions
DEMAND FOR HEALTH CARE
—------------market for health care
DEMAND SCHEDULE
- represents the relationship of price to quantity
demanded in the form of a table.
1. Individual Demand Schedule Refers to the schedule of
a person or household that shows the quantities
demanded at each price.
2. Market Demand Schedule -sum of all individual
demands. -It is derived by adding up the quantities that
every person or household is willing and able to purchase
at each price for a particular good.
INDIVIDUAL DEMAND SCHEDULE
-of a college student for skin whitening product

BUYERS Choice Price (P) (in Quantity

1. Perfectly healthy Individuals pesos) Demanded (QD)
2. Individuals who are suffering from illness
EVERYONE WHO PURCHASE GOODS AND SERVICES A 10 10
CONCERNING HEALTH CARE
B 20 8
SELLERS
Physicians, nurses, radiologists, dentists, owners of C 30 6
health care firms
EVERYONE WHO PROVIDE GOODS AND SERVICES D 40 4
CONCERNING HEALTH CARE.
E 50 2

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DEMAND CURVE
- The demand curve is illustrated by plotting the
listed prices and quantities from the given
schedule.
- When the points are connected with a line, the
demand curve is derived
- Vertical Axis- Price Horizontal Axis
- Quantity Demanded

𝑄𝑑 = 𝑎 − 𝑏𝑃
Qd = Quantity Demanded
P= Price
b = slope
A = constant term

𝑄𝑑 = 1,400 − 8𝑃

Solve for Qd when P=60:

Qd = 1400 – 8P
Qd = 1400 – 8 (60)
Qd = 1400-480
Qd = 920 units

Solve for Qd when P=30:

Qd= 1160 units

Solve for Qd when P=10:

Qd= 1320 units

DEMAND EQUATION

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DETERMINANTS OF DEMAND
CHANGES INVOLVING DEMAND
1. PRICE FACTOR
- The most obvious factor that people consider in
CHANGE IN QUANTITY DEMANDED
buying a certain good or service is the price of
the product.
- Hence, if health care services offered are - A change in quantity demanded happens
expensive, only few people will be willing and whenever there is a change in price, ceteris
able to avail such service. paribus
2. NON-PRICE DETERMINANTS
1. Income
2. Price of Related Goods
3. Taste and Preferences
4. Number of Buyers
5. Expectations
NON-PRICE DETERMINANTS OF DEMAND
1. INCOME As people’s income changes, they may -
buy more or less of a particular good. - The change in Qd is represented by a movement
a. Normal Good It is a product in which demand along a demand curve
varies directly with income.
b. Inferior Good It is a product in which demand
varies inversely with income. -Canteen food,
Sardines, Instant Noodle
2. PRICE OF RELATED GOODS
The demand for a good is also affected by the price and
availability of related products.
a. Substitute Good
- It is a product that can be used in
replacement of another product. ________________________________________________________
- When two goods are substitutes, an
increase in the price of an alternative CHANGE IN DEMAND
good will increase the demand for the
other good. ➔ CHANGE IN QUANTITY DEMANDED
- A change in quantity demanded
happens whenever there is a change in
price, ceteris paribus.
- The change in Qd is represented by a
2. PRICE OF RELATED GOODS
movement along a demand curve.
b. Complementary Good
➔ CHANGE IN DEMAND
- It is a product that is always used together with
- A change in demand occurs whenever
another product.
there is a change in non-price
Toothpaste & Toothbrush, Coffee & Creamer
determinants of Demand, ceteris
- When two goods are complements, an increase
paribus.
in the price of good will decrease the demand
- The change in demand is represented
for the other good
by the shift of the demand curve.
SUMMARY:

3. TASTE & PREFERENCES

- Several factors that may influence how
consumers like and prefer goods include trends,
seasonality, health hazards, advertisement,
culture, and religion.
- -ex. vegan product
4. NUMBER OF BUYERS
- Higher population or greater market size results
in higher demand, while a lower population or
market size takes the reverse situation
5. EXPECTATIONS
- Expectations refer to the anticipation of
consumers concerning future events, which can
affect the demand for a good at present.
- -Future prices and Future income

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- In other words, it lists the prices and

the corresponding quantities supplied
for a particular good or service
1. Individual Supply Schedule
- The supply schedule that shows the
quantities supplied at each price by
one firm.
2. Market Supply Schedule
- A market supply schedule is the sum
of the individual supply schedules of
all firms in the industry
1. Individual supply schedule (of a medical firm
owner)

2. Market supply schedule (In pangasinan)

END….

IV. SUPPLY SCHEDULE

M5: SUPPLY - It serves as the graphical representation of the
I. WHAT IS SUPPLY? supply schedule.
➔ Supply represents the goods or services that - The supply curve plots the listed prices and
companies, producers, and sellers provide to quantities from the given schedule
the market. Vertical Axis- Price
➔ For most economists, supply refers to the Horizontal Axis- Quantity Supplied
quantity of goods or services that sellers are
both willing and able to sell at certain IV. SUPPLY CURVE
conditions
II. LAW OF SUPPLY
➔ The Law of Supply explains how firms react to
changes in price.
PRICE
- price is the amount of money a seller charges
for a good
QUANTITY SUPPLIED (QS)
- is the amount of good or service that a firm is
willing and able to sell at a specific price. NOTE: the supply curve slopes upward, which means
According to the law of supply, quantity supplied is that a firm is willing and able to sell more at higher prices
POSITIVELY RELATED to price. than it is at lower prices.
⬆️⬇️
⬆️⬇️
Price of a good/service
QS of the good service
Activity
Graph the given Market Supply Schedule Below
III. SUPPLY SCHEDULE
- -It represents the relationship of price
to quantity supplied in a table form.

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b= 30/1
b=30
Qs= a+30P
In solving for a, choose 1 point
Qs= a+30P
V. SUPPLY EQUATION 20=a+30(2)
20=a+60
𝑄s = 𝑎 + 𝑏𝑃
20-60=a
Qs = Quantity Supplied
a=-40
P= Price
Qs= -40+30P
a = constant term (it is always negative)
b = Price coefficient of supply. It indicates the
responsiveness of the producers

𝑄𝑠 = -40 + 30𝑃
𝑄𝑠 = -40 + 30(7)
Qs=-40+210
Qs=170

Assume that P= 7
What is Qs?
QS=170

Assume that P=5

CHANGE IN QUANTITY SUPPLIED
What is Qs?
- change in quantity supplied happens when its
Qs = 110
price varies, ceteris paribus.
- The change is represented by a movement
Assume that
along a supply curve
Qs=50
CHANGE IN SUPPLY
What is P?
- a change in supply occurs whenever there is a
P=3
change in non-price determinants of supply.
- The change in supply is represented by the shift
V. SUPPLY EQUATION of the supply curve

CHANGE IN QUANTITY SUPPLIED

𝑄s = 𝑎 + 𝑏P
1. Find b

CHANGE IN SUPPLY

2. Solve for a
Given: P1 =2, QS1=20
P2=3, QS2=50

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NON-PRICE DETERMINANTS OF SUPPLY

1. INPUT COSTS
- -Inputs of Productions (raw materials,
rents, wages of workers, and

⬆️ ⬇️
interests).
input costs supply

2.TECHNOLOGY
- Advances in technology may change
the level of supply.
- Technology improves the productivity
of workers and increases the efficiency

⬆️ ⬆️
of the production process.
Technology Supply

The end……….

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