ABSTRACT
This chapter provides an explanation of the microeconomic tools used in the text by reviewing material encountered at the introductory and intermediate levels of learning. It presents the material in a way consistent with more detailed and rigorous treatments in a standard microeconomics course and explores the academic give-and-take of disputes over issues as well as much of the mathematical detail. The chapter provides the concept of scarcity and reviews supply-and-demand analysis. It focuses on to demand first and then to supply, developing the underlying ideas behind these tools, and then combine them into models of market structures, emphasizing those featured in health economics. It explores the production possibilities problem with a table illustrating a classic dilemma concerning society's trade-off between guns and butter. A helpful theoretical tool that illustrates the idea is the production possibilities frontier. The idea that is a frontier means that we are representing society's best possible production.
