Example questions
Question 1
a. Describe as precisely as possible what the relationship is between the following concepts:
scarcity, economics, governmental intervention, market failure and health economics.
Economics is the study of choices under scarcity, and scarcity is the tension between unlimited needs
and limited resources. Health economics is an applied field of economics, which is the study of how
(scarce) resources are allocated to and within the healthcare system by individuals, healthcare
providers, and governments in health decision-making. Market failure is a state where a sub-optimal
allocation of resources is present. This leads to governmental interventions.
b. In the table below, five factors are mentioned. Indicate for each factor whether it positively
or negatively influences innovation and explain why
Competitive market structure influences innovation positively because of competing entrepreneurs
which all want the highest profits and innovation is needed to get this.
Economic growth influences innovation positively because higher outputs lead to higher profits
which lead to a decrease in prices and this leads to innovation.
Monopolistic market structure influences innovation positively because it leads to high profits and
when another organization tries to get better monopoly power, the organization is stimulated to
innovate so that the other organization doesn’t get the monopolistic position.
Institutions influences innovation positively because there are a lot of rules and regulations where
organizations must comply to and to comply to those rules and regulations innovation is needed.
Routines influences innovation positively because if a routine fails, an organization searches for a
new routine by innovation.
c. Is the following proposition true or false? Please provide 2 arguments supporting your
answer. ‘Innovation is important from an economic point of view because it can reduce the
problem of scarcity’.
The proposition is true, because innovation could improve production efficiency by lowering the
transaction costs and by this lowering the costs of care and improve the outcomes for patients, so
the problem of scarcity will be reduced. Also, innovation could improve production efficiency by
improving the economies of scale and by this lowering the costs of care and improve the outcomes
for patients, so the problem of scarcity will be reduced.
The proposition is false, because innovation can lead to new more expensive treatments which result
in higher healthcare costs and more scarcity because you have less healthcare resources. Also,
innovation can lead to monopolistic firms, who can set high prices for their products and because of
this people will have more problems of scarcity.
d. Health economics is expected to develop in different directions in the future. Describe three
possible directions and indicate why development in this particular direction is expected.
Three possible directions to develop in the future of health economics are
Question 1
a. Describe as precisely as possible what the relationship is between the following concepts:
scarcity, economics, governmental intervention, market failure and health economics.
Economics is the study of choices under scarcity, and scarcity is the tension between unlimited needs
and limited resources. Health economics is an applied field of economics, which is the study of how
(scarce) resources are allocated to and within the healthcare system by individuals, healthcare
providers, and governments in health decision-making. Market failure is a state where a sub-optimal
allocation of resources is present. This leads to governmental interventions.
b. In the table below, five factors are mentioned. Indicate for each factor whether it positively
or negatively influences innovation and explain why
Competitive market structure influences innovation positively because of competing entrepreneurs
which all want the highest profits and innovation is needed to get this.
Economic growth influences innovation positively because higher outputs lead to higher profits
which lead to a decrease in prices and this leads to innovation.
Monopolistic market structure influences innovation positively because it leads to high profits and
when another organization tries to get better monopoly power, the organization is stimulated to
innovate so that the other organization doesn’t get the monopolistic position.
Institutions influences innovation positively because there are a lot of rules and regulations where
organizations must comply to and to comply to those rules and regulations innovation is needed.
Routines influences innovation positively because if a routine fails, an organization searches for a
new routine by innovation.
c. Is the following proposition true or false? Please provide 2 arguments supporting your
answer. ‘Innovation is important from an economic point of view because it can reduce the
problem of scarcity’.
The proposition is true, because innovation could improve production efficiency by lowering the
transaction costs and by this lowering the costs of care and improve the outcomes for patients, so
the problem of scarcity will be reduced. Also, innovation could improve production efficiency by
improving the economies of scale and by this lowering the costs of care and improve the outcomes
for patients, so the problem of scarcity will be reduced.
The proposition is false, because innovation can lead to new more expensive treatments which result
in higher healthcare costs and more scarcity because you have less healthcare resources. Also,
innovation can lead to monopolistic firms, who can set high prices for their products and because of
this people will have more problems of scarcity.
d. Health economics is expected to develop in different directions in the future. Describe three
possible directions and indicate why development in this particular direction is expected.
Three possible directions to develop in the future of health economics are
