ABSTRACT

Economics is the social science of how goods and services are produced, distributed, and consumed; it is traditionally divided into microeconomics and macroeconomics (see Table 4D.1). An axiom in healthcare is that demand exceeds supply. The amount of resources that could potentially be spent on healthcare is innite; therefore, the resources that are actually available for healthcare will always be relatively scarce. As a result, choices must be made over how to spend the healthcare budget. Health economics is the science of making these decisions (i.e. how best to employ scarce resources that have alternative uses). The discipline is divided into positive and normative economics (see Box 4D.1).