ABSTRACT
In Chapter 3 we examine how the basic theory of economics may be applied to health care. An analysis of the supply and demand of health care is provided, and the discussion centres on whether the market framework will provide an efficient method for allocating scarce health care resources. Concentrating on the problems of imperfect knowledge and informational asymmetry, we analyse how conventional economic theory may be modified to accommodate the peculiarities of the health care market.
