Dynamics of Healthcare Markets: The Traditional Competitive Model

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Sep 1, 2025

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HCA 6013 Dynamics of Healthcare Markets: The Traditional Competitive Model

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HCA 6013 Dynamics of Healthcare Markets

Module Two

The Traditional Competitive Model

Briefly describe how consumers achieve utility.
Describe what is meant by the term equilibrium and why the equilibrium outcome is desirable.
Describe what a demand curve is and provide example of one you personally experience when purchasing combo goods. Does that hold for purchasing your healthcare? Why or why not?
Explain the concepts of elasticity and price elasticity of demand.
How do producers seek to maximize profits?
Describe the notions of marginal cost and marginal revenue.
Describe the production process and the variables affecting the production process.
Describe ways short run and long run production differs.
Explain what is meant by competitive market equilibrium.
Describe the concepts of shortages and surpluses.
Outline the effects of changes in supply and demand on equilibrium. (use a table if you wish)
The Primary Care Enhancement Act or 2025 allows individuals to use their Health Savings Accounts (HSAs) to pay for Direct Primary Care. DPC charges a patients a monthly membership fee for an agreed upon amount of care (usually excludes labs). To meet service promises, DPC panels are smaller than standard primary care. The legislation was intended to lower healthcare costs. Using the constructs in the chapter, what in your opinion do you think will happen to consumer demand, supply and price of primary care? Will it decrease or increase? BOLD THE CONSTRUCTS USED IN YOUR ANSWER. You do not need to use all constructs from the list.

Struggling with where to start this assignment? Follow this guide to tackle your assignment easily!

Here’s a clear, step-by-step approach you can use:

Step 1: Understand the Core Topic

This assignment is about the traditional competitive model in healthcare markets.
Make sure you’re comfortable with key economic terms like utility, equilibrium, demand, elasticity, marginal cost, marginal revenue, shortages, surpluses, etc.

Step 2: Answer Each Question Systematically

Utility – Define utility in economics (satisfaction gained from consumption). Explain how consumers make choices to maximize utility.
Equilibrium – Define market equilibrium (where supply = demand). Explain why it creates stability and efficiency.
Demand Curve – Describe what it is (graph showing relationship between price and quantity demanded). Give a personal example (e.g., buying a fast-food combo when the price is reduced). Compare with healthcare (is healthcare demand price-sensitive?).
Elasticity – Define elasticity (responsiveness of demand to changes in price). Explain price elasticity of demand with an example.
Profit Maximization – Explain how producers maximize profit (producing at a level where marginal revenue = marginal cost).
Marginal Cost & Marginal Revenue – Define both and explain their relationship in decision-making.
Production Process – Describe steps in production and factors influencing output (labor, capital, technology).
Short-run vs. Long-run – Short-run = at least one fixed input (like equipment). Long-run = all inputs are variable.
Competitive Market Equilibrium – Define and explain how competition drives efficiency.
Shortages & Surpluses – Define and explain with examples (shortages push prices up, surpluses push prices down).
Changes in Supply & Demand – Show in a table or diagram how shifts affect equilibrium price and quantity.
DPC Case (Legislation) – Use constructs like demand, supply, equilibrium, marginal cost, price elasticity in your answer. Analyze whether DPC will increase demand (due to affordability) and how smaller panels affect supply.

Step 3: Organize Your Paper

Introduction: Briefly introduce healthcare economics and the purpose of this assignment.
Body: Address each numbered question as a separate section. Use headings or bold numbers.
Conclusion: Summarize how the traditional competitive model helps us understand healthcare dynamics.

Step 4: Support with Examples & References

Use real-world examples (e.g., rising demand for telemedicine, shortages of primary care doctors).
Cite textbooks, healthcare economics articles, or government sources.

Step 5: Review & Format

Ensure APA formatting (if required).
Proofread for clarity and flow.

🔗 Helpful Resources for Further Reading

Investopedia – Market Equilibrium
Khan Academy – Supply, Demand, and Market Equilibrium
Health Affairs – Primary Care and Market Dynamics

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