Econ 545 Essay

1681 words - 7 pages

ECON 545

BUSINESS ECONOMICS

PAPER PROJECT ONE

INTRODUCTION

The career choice made by an individual today is basically for the entire journey of life. This paper will be basically based on situation A, where Jenny needs advice in making decision for her career as to be a doctor. The focus of this paper will be demand and supply of physicians in US market and it will elaborate on determinants of demand and supply of physicians with recent data analysis, price elasticity of demand and supply, construction of demand and supply graph using the recent data. Thus, based on the analysis the recommendations will be identified in regards to market of physicians in US economy.

DEMAND FOR ...view middle of the document...

On the other hand, new technologies, new tests, procedures, pharmaceuticals can become substitutes for physicians too. This will lead to reduction in the demand of physicians.

iv) Population and demography
The table below shows projected increase in population from 2015 to 2035.

(Source: Annals of Family Medicine, Mar/Apr2015, Vol. 13 Issue 2, p107-114, 8p, 4 Charts,Graph Chart; found on p110 )
The growth and aging population will cause the demand for physicians to increase. As the population grows the demand for medical facilities will increase too, therefore the future demand for physicians will increase.

v) Government policy
The changing role of government which is basically connected to people of the country, such as increase in the cost of coverage under affordable care act and more medical facilities like medicare and Medicaid benefits will affect the demand for physicians in the economy.

vi) Status of the Economy – Economic Growth
Cooper et al. (2002, p. 143) state that “the major trend affecting the [per capita] demand for physician services is the economy.” The demand for physicians is also based on people’s ability to afford the medical expenses. Tax collection for the state also affects the medical incentives to be provided to the public.

B) Price Elasticity of Demand
The service provided by physicians have no close substitutes available, and the medical services is a necessity for individuals this concludes that the physicians have inelastic demand.

C) Graph of Demand
The demand curve of individual Physicians is the downward sloping curve from left to right due to the law of demand. That is, when the fees of physicians services increases the demand for their services may decline to some extent, on the other hand, when the fees would decrease the demand for individual physician will increase.
Demand Curve for Physician Services

Price ( $)

D

Quantity of Physician Services

The inelastic demand curve for Physician services shows that a percentage change in price will lead to a less proportionate change in the quantity demanded.

SUPPLY OF PHYSICIANS
According to the US Department of Health and Human Services, Health Resources and Services Administration Bureau of Health Professions December (2008), “the size, demographics, specialty mix, practice location, and practice patterns of the current physician workforce are the outcome of current and past decisions made by nearly 800,000 individual physicians”. The supply of labor force in an economy is based on number of factors. As in this case what, where, when and how to practice as Physicians are influenced by numerous factors, including: personal preferences, market forces, State and Federal policies and programs, and institutions that constitute the health care system and medical education...

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