ABSTRACT
In Chapter 6 the perfect competition model was explained, and it was emphasised that the model aspired to be a tool of analysis rather than a description of reality. In this chapter that tool will be used further. Some of the major ways in which health markets diverge from the model will be explored and the model will be used to address the efficiency implications of these divergences. Mostly, the analysis involves only demand and supply curves, but it is important to remember that in a perfect market, demand curves are marginal utility curves and supply curves are marginal cost curves (review sections 6.2 and 6.4 if necessary).
