Jump to ContentJump to Main Navigation
Principles in Health Economics and Policy$
Users without a subscription are not able to see the full content.

Jan Abel Olsen

Print publication date: 2009

Print ISBN-13: 9780199237814

Published to Oxford Scholarship Online: May 2010

DOI: 10.1093/acprof:oso/9780199237814.001.0001

Show Summary Details
Page of

PRINTED FROM OXFORD SCHOLARSHIP ONLINE (www.oxfordscholarship.com). (c) Copyright Oxford University Press, 2019. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 14 October 2019

Economics and efficiency

Economics and efficiency

Chapter:
(p.17) Chapter 2 Economics and efficiency
Source:
Principles in Health Economics and Policy
Author(s):

Jan Abel Olsen

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199237814.003.0002

This chapter introduces the ‘dismal science’ of economics to non-economists, and draws trained economists' attention to those parts of their discipline that are most relevant in the context of this book. It argues that the equilibrium point at which demand equals supply offers an attractive theoretical solution to ‘the grand economic problem’ of how much to produce in order to maximize welfare. The interaction between producers and consumers, each of them acting out of their own self-interest, brings about an optimal outcome where social welfare is maximized. The idea that an ‘invisible hand’ can bring about allocative efficiency has been immensely attractive to economists since the founding father of modern economics, Adam Smith (1723-1790), introduced this parable. However, the ‘invisible hand’ is troublesome in the real world, where a range of restrictive assumptions will have to be satisfied for the market to be the ideal system for achieving efficiency. Exercises and suggested readings are included at the end of the chapter.

Keywords:   health care, economics, supply and demand, social welfare

Oxford Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs , and if you can't find the answer there, please contact us .