Economic Tools and Concepts Economic Tools and Concepts
The core of economics is known as the law of demand. Every time you pull out your pocketbook to purchase something, the law of demand is at work. The better you understand the law of demand, the better you will understand why you pay different prices for different goods. Demand is the relationship between the quantities of a good or service consumers will purchase and the price charged for that good. The law of demand states that the quantity demanded for a good rises as the price falls, with all other things staying the same. The law of demand also states that if factors remain equal the higher price of goods, creating a lesser demand for the product (Getzen, 2007). Current issues such as health care and the effects on the economy are subjects that could be assessed through economic tools and concepts.
The United States of America spends billions on the health care industry. This has proven to cause a negative effect on the United States economy, for example, this has brought about inflation and unemployment and definitely not suitable for economic growth and development. These negative aspects affect sectors of the economy households, corporate markets, and the government, and an essential role in the financing and funding the United States health care system. The local and federal government collects taxes from individuals and corporations to provide funds for the health insurance programs. Corporations offer employment and issue health insurance to their employees but many individuals viewed as the final consumer incurs some health care costs. The effects of health care expenditure on one sector may affect other interrelated sectors (U.S. Department of Health and Human Services. 2005).
Competitors
The competition in a particular market arena increases if an existing laboratory chooses to concentrate in a particular area, or when an existing laboratory diversifies with new technologies and techniques, or improves present services significantly. The current laboratory market arena the view of this type of competition that clinicians hire pathologist to assist them to measure and read the various specimens, and send the specimens to sophisticated laboratories for technical processing. The clinician takes the slides to the pathologist to finalized the diagnosis resulting in splitting the laboratory revenue in half, and the clinician receives a profit for the processing the specimen.
Concept tools
The economists use several concepts that enable the public to understand better how the economy operates using these tools and concepts in the health care system. The government and the public can take an active role in enhancing the existing economy with applying some of the concepts tools. The evaluation of current health care system requires the use of various economic tools and concepts and these tools and concepts, include, cost analysis, marginal analysis, and the supply and demand analysis (Getzen, 2007). The C D C (2013) defines the cost analysis as the methodically collection, categorization, and analysis of the program intervention, cost, and cost of health. The marginal analysis uses any small incremental changes in the key variables and analyzes the data. The limited supply of a product increases the demand and increases the price of the product.
Costs
The cost analysis often viewed as the evaluation of costs incurred for any program without taking into consideration the achievements of the health care outcomes and the benefits. The cost categories include the direct costs, tangible costs, and the indirect costs, and the indirect and direct become further categorized into the non-medical and the medical costs. The direct costs characterize the value of the resources used in the interventions or medical services. Medical intervention and programs may, include, treatment, diagnosis, any related medical service. The non-medical services of the essential expenditure not health related, such as childcare, cost of patient transport, and the advertisement about patient education. The government should fund health care facilities in relation to direct and indirect costs incurred in treatment and also the type of conditions and illnesses treated at each facility with the increase in funding results in increased essential health care services (U.S. Department of Health and Human Services. 2005).
Supply and Demand
A fundamental economic concept the supply and demand analysis remains an essential tool in the corporate market, especially in the health industry. The demand and supply analysis determines the price of a given service or product and also establishes the equilibrium. In the competitive market the supply and demand analysis depicts, explicates and predicts the variation in quantity and supply of goods. In relation to the funding the facility should know the stipulated amount of money and the effect on the demand and supply of the services offered (Getzen, 2007).
As seen in diagram 1.0, change in a commodity or service results in the movement along the demand curve. An increase in price from the P0 to P1 results in decrease in demand from the Q0 to the Q1. In relation to the health care funding, increase in price of services as a result of minimal funds results in a decrease in the number of patient demand.

Diagram 1.0 As seen in the diagram 1.1, increase in the price from P0 to the P1 brings about an increase in the quantity from Q0 to Q1. In this case the health care industry funding, increase in the amount of funds encourages the health care facilities to offer more medical services. Marginal analysis
As established by Fuller and Stevenson (2003), the perception of marginal analysis is the next unit. A health care institution may decide to either expand the laboratory unit or a physician may decide to work extra hours. The marginal tool remains an essential aspect of helping people to make valid decisions, especially on changes in benefits and costs of the services. The decisions formulated in the margins and seldom on the “nothing” or “all” basis. A marginal cost that exceeds the change in marginal cost an individual should go ahead with the planned aspect. If the change of costs exceeds the change in marginal cost the individual does not execute the planned aspects. The marginal benefits of goods and services may decrease with the increase in the consumption of services (Getzen, 2007).
The health economist should advise the medical practitioners on the maximizing the health benefits of the given population. The health care economist is not concerned with reducing the costs of health care the economist focuses on improving the level and distribution of a persons’ health with the available resources. In addition the health care facilities should offer high quality services and increase the demand for these services to increase the profits.
Conclusion
The many tools and concepts that the health care economist can use but the cost analysis, marginal analysis, and the supply and demand apparently makes the determination whether to proceed with the planned aspect or not. The cost analysis gathers the information needed and the marginal analysis helps people to make a valid decision. The supply and demand establishes that the less supply, the demand increases, and the price increase.

References
CDC, (2013). Cost Effect Analysis. Retrieved from http://www.cdc.gov/owcd/EET/Cost/fixed/1.html
Fuller, D., and Stevenson, G. D. (2003). Consensus Among Economists. Journal of Economic Education, 34: 369- 387
Getzen, T.E., (2007), Health Economics and Financing, Third Edition Retrieved from the University of Phoenix e-book collection
U.S. Department of Health and Human Services (2005). Effects of Health Care Spending on the U.S. Economy. Retrieved on 22 October, 2013 from http://aspe.hhs.gov/health/reports/08/healthcarecost/report.pdf