ABSTRACT
This chapter discusses the general approach of economics to production, and explores how this can help in understanding production of health and health care. Production is the process of ‘changing the form or arrangement of matter to adapt it better for the satisfaction of wants’. The basic economic theory of production can be useful in giving a focus to some issues in the delivery of health care. Constraints on doing this often come from the very specific bundles of skills held by health care professionals. Production theory raises a number of important issues in health care. The slope of isoquants is determined by the extent to which the inputs are substitutes for each other. The example suggests that there is a trade-off between bicycles and staff, but that they are not perfect substitutes.
