Microeconomics journal entry

The article I have selected relates to the demand and supply of health care in the United States. The world we live in has limited resources, with an increasing demand for healthcare. These demands can be controlled by either be reducing the demands that can be through charging for health services, such as in the case of water. Or either it can be through raise in supply that is increasing the investment of the health care industry. Supply and demand are the two instruments that play the role in determining the consumption of any product or service.

Previously the supply side policies were used to set policies regarding the challenges in the healthcare industry however, now demand also has to be managed to assist in making decisions. Demand management is concerned with molding the demands of the people in such a manner that the health requirements of the people are satisfied in the resources on hand. (Pencheon, 1998) The management of demand does not imply to the fact of reducing the demand it also deals with the increasing of demand in the cases where demand is being underutilized.  More specifically demand management “is the support of individuals so that they may make rational health and medical decisions based on a consideration of benefits and risks.”

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Some of that factors that influence the increase in demand can be age, due to the increase in the life expectancy rates of the old this causes a burden on the society as it has to distribute its scarce resources amongst more people.  Additionally innovation can be a source of using up of more resources, as some of the technologies mount up the costs. While some of the innovations do not consume much resources but help in the saving of up the lives of millions. Moreover a rising knowledge and awareness amongst the people lead to an increase in demand for a healthier lifestyle, which leads to a further increase in demand for healthcare. The expectation of the people regarding their health has to be incorporated to a source of increase in demand. With regards to that polices should be made to mange demand. As the resources are limited choices have to be made regarding which mode of health care is more obligatory for the public than the others. In other words the government desires rationing to be done nevertheless, there are a lot of criticisms of following this approach. People believe the population if predetermined hence the demand for the health care is also predetermined, that is why the government should take steps to set up adequate health care facilities for the public instead of providing rationing, as a solution to satisfy the increase in demand. (Pencheon, 1998) Recourses are limited but the government spending should give their priority firstly to provide a healthy life style to the people. Additionally due to increased demand for the health services they will become pricier in the future.

To utilize the resources most efficiently the demand and supply should be in equilibrium, as at this point the resources are being utilized mast competently. A gap between supply and demand leads to the waiting of patients and doctors and leads to the wasting of resources. The demand in the healthcare business is predictable to a great extent through hospital management system which makes it even easier to arrange the supply of the health care with relation to the demand. (McGuire & Randall, 1993)This way the health care business will be functioning at equilibrium, that is the demand equals the supply hence the resources will be used most capably.


McConnell, Campbell R, & Brue, Stanley L (2006). Economics.McGraw-Hill/Irwin; 17th edition.

McGuire, Thomas G., & Ellis, Randall P. (1993). Supply-Side and Demand-Side Cost Sharing in Health Care. The Journal of Economic Perspective. 7, 135-151.

Pencheon, David. (1998). Matching demand and supply fairly and efficiently, British Medical Journal



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Microeconomics journal entry. (2017, Jan 05). Retrieved from https://graduateway.com/microeconomics-journal-entry/