Course Project: Part 1

Topics: Supply and demand, Elasticity, Price elasticity of demand Pages: 11 (2064 words) Published: May 25, 2014


BUSINESS ECONOMICS: ECON 545
Course Project: Part 1
Professor Robert Senn

INTRODUCTION
Based in recent surveys, reports show a trending decline on the rate at which physicians move. Statistically, this (may) suggest the economy is preventing or affecting physicians from frequent job changes, or retirement. According to survey results, the move rate was reported as follows: 18.2% in 2008, 15% in 2009, 12.4% in 2010, and 11.3% in 2011. In as much as this reflects an obvious trend of lower move rate over the years, and may be attributed to a number of factors, it is however not enough scientific measure to ascertain the market supply and demand for physicians. PURPOSE:

The purpose of this paper is to analyze the current position of physicians, and to establish an informed/detailed study of the trends. The research will also establish a theoretical framework of these trends, and their relatedness to the law of Demand and Supply with a focus on physicians. This review will among other things, institute recommendations. DEMAND DETERMINANTS

The Law of Demand:
As an initial approach, the analysis in this research paper will not be far-reaching if the concept of Demand is not critically examined. Demand has been defined in Economics as the goods and services people are willing and able to buy during a certain period of time at various prices, holding all other relevant factors constant (known as the ceteris paribus condition) (Chiang, 2014). A simple way to explain this would be to use an everyday example of say - a café. If for instance a café increases the price of items, the quantity demanded will decrease because fewer people will be willing and able to spend their hard-earned resources on such. Conversely, if the prices of items in the café decrease, the quantity of (latte or coffee) buyers will increase. A typical example is the after Thanksgiving discount sales – popularly known as “Black Friday”. This usually results in massive quantities of sales. So the Law of Demand demonstrates the counter-relationship between the price of a product and the quantity of the product consumers demand. To summarize the concept, when the price of a product falls, the quantity demanded of the product will increase, and conversely, when the price of a product increases, the quantity demanded of the product will decrease – where all other relevant factors are constant. (Glen, 2012). Below is a Typical Demand Curve:

Fig. 1

For this study, Demand is the request of the patient for medical care services. The physician demand estimates are based on recent healthcare utilization and healthcare delivery patterns. In determining this, health care use is translated into the demand for physician services, and then into demand for physicians. Current patterns of utilizing physician services is regarded as the level of services for which the U.S. is able and willing to pay. The demand determinants are based on the projection for future demand trends in one or more of the following three major factors: 1) Changing demographics. High use of physician services by a rapidly growing elderly population suggests that demand for physicians will grow at a faster rate than the overall population. The impact of changing demographics on physician demand is modeled by estimating physician-to-population ratios based on current patterns of healthcare utilization and delivery. I would consider the effect of the aging baby boom generation on the economy as an example. Older people have a greater demand for medical care than younger people do. So in coming years, the demand for physicians and hospital facilities should all increase. The increasing demand for health care is so strong that between the beginning of the 2007–2009 recession and June 2011, 1 million new jobs were created in health care, even at the same time as total employment in the...

References: Chiang E. P. CoreMicroeconomics (3rd Edition). 2014. USA: Worth Publishers
Glenn, R., Patrick A. Economics, (4th Edition). 2012. Pearson Learning Solutions
Slavin S. A Self-Teaching Guide Economics (2nd Edition). USA: John Wiley & Sons
Sowell T. Basic Economics. 2004. USA: Basic Books
http://www.netmba.com/econ/micro/supply/curve/
https://www.aamc.org/data/workforce/
http://www.innovationlabs.com/pa_future/1/background_docs/AAMC%20Complexities%20of%20physician%20demand,%202008.pdf
http://2012books.lardbucket.org/books/theory-and-applications-of-economics/s20-01-supply-and-demand-in-health-ca.html
Yang, B. M. Abstract – Asia Pac J Public Health. January 1989; vol. 3: http://aph.sagepub.com/content/1/2/26
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