2. Introduction to Markets
• Market – is any place or
process that brings
together buyers and
sellers with a view to
agreeing a price
• In economics, a market is
not a place but rather a
Market is defined not by
its location but by its
participants
3. Introduction to Markets
Market includes the following organizational
units:
• the market for consumer goods and services;
• the market of means of production, and
• introduction of new technologies and information;
• labor markets;
• capital market (financial market);
• shadow (black) market.
4. How Broadly Should We Define The Market
• Defining the market often requires economists to
group things together
– Aggregation is the combining of a group of separate
things into a single whole
• Markets can be defined broadly or narrowly,
depending on our purpose
– How broadly or narrowly markets are defined is one of
the most important differences between
Macroeconomics and Microeconomics
5. M Defining Maaccrrooeeccoonnoommiicc MMaarrkkeettss
• Goods and services are aggregated to the
highest levels
– Macro models lump all consumer goods into the
single category “consumption goods”
– Macro models will also analyze all capital goods as
one market
– Macroeconomists take an overall view of the economy
without getting bogged down in details
6. M Defining Miiccrrooeeccoonnoommiicc MMaarrkkeettss
• Markets are defined narrowly
– Focus on models that define much more specific
commodities
From consumer point of view, a market – is a place of
the distribution of goods and services, were purchase,
sale and exchange are carried out.
7. Buyers and Sellers
• Buyers and sellers in a market can be
– Households
– Business firms
– Government agencies
• All three can be both buyers and sellers in the same market, but not
always
• For purposes of simplification we will usually follow these
guidelines
– In markets for consumer goods, we’ll view business firms as
the only sellers, and households as only buyers
– In most of our discussions, we’ll be leaving out the
“intermediaries”
8. MEDICAL SSEERRVVIICCEESS MMAARRKKEETT
• Market mechanism is functioning due to the interaction
of inter three components: demand, supply and price.
DDeemmaanndd - is the number of medical services, which
patients are willing and able to buy at different
possible prices.
•Demand acts as a solvent need for medical services.
•Demand changes are influenced by price.
•By reducing the prices of services the patient wants to
buy more services so the demand increases.
Thus, ceteris paribus the demand for services varies in
inverse proportion to price.
9. MEDICAL SSEERRVVIICCEESS MMAARRKKEETT
• The relationship between price and quantity
of buyers of health services is called the
demand curve.
• It shows the number of services that will be
demanded at different prices.
10. MEDICAL SSEERRVVIICCEESS MMAARRKKEETT
FFaaccttoorrss aaffffeeccttiinngg ddeemmaanndd::
• Price is the most important determinant of any medical
services.
But there are other factors that may affect the purchase:
1. Change of the "tastes" of patients (the fashion for
certain plastic operations has increased the demand for
this type of medical services).
2. Demographic situation (population – is the number of
potential patients, changes in population structure, such
as aging population increases the demand for medical
services and medicines).
11. Factors aaffffeeccttiinngg ddeemmaanndd ((ccoonntt……))
3. Market size, availability of health services and
their prices.
4. Income levels (the higher the income, the more
possibilities to receive medical services).
5. Consumer expectations concerning future
prices and incomes.
6. Creating demand for medical services
through advertising, etc.
12. MEDICAL SSEERRVVIICCEESS MMAARRKKEETT
TThhee ssuuppppllyy – is the desire of health workers to
offer to sell their services.
• Quantitatively, it is measured and expressed in
quantity or the volume of supply.
• The volume of ssuuppppllyy: The amount of medical
goods and services that is offered for sale at all
possible prices in the market.
13. MEDICAL SSEERRVVIICCEESS MMAARRKKEETT
• There is a tendency of suppliers to offer more of a
good at a higher price and less at lower prices.
• The law of demand describes how price affects
CCOONNSSUUMMEERRSS…
• And the law of supply describes how price
affects PRODUCERS.
14. MEDICAL SSEERRVVIICCEESS MMAARRKKEETT
• Supply curve shows the relationship between
market prices and the value of supply.
Positive slope of the supply curve reflects the law
of supply.
WWhheenn pprriiccee ggooeess uupp SSuuppppllyy ggooeess uupp
WWhheenn pprriiccee ggooeess ddoowwnn SSuuppppllyy ggooeess ddoowwnn
15. FFaaccttoorrss aaffffeeccttiinngg ssuuppppllyy::
1. input prices (the cost of medical education, tools, instruments -
directly affect the supply of medical services);
2. new medical technologies allow to increase the supply by
reducing costs and stabilize prices;
3. number of sellers on the market. The more physicians in the
market of health care, the greater the market of supply;
4. taxes are considered by manufacturers as expenses;
5. expectations of medical staff (changes in prices of resources,
changes in tax policy, etc.).
16. MEDICAL SSEERRVVIICCEESS MMAARRKKEETT
• TThhee pprriiccee - is a monetary expression of value of
services. It is influenced by supply and demand.
The price is a result of the interaction of patient
and manufacturers (medical stuff).
• The demand price is the maximum of the price
at which the patient agrees to receive this service.
The market price can not rise higher demand
prices, because patients have no money to pay
for services more.
17. MEDICAL SSEERRVVIICCEESS MMAARRKKEETT
• Manufacturers (medical stuff) want to provide
services to the highest prices. The result is a
price of supply.
• The price of supply is the minimum price at
which manufacturers are still ready to provide this
service to patients.
• The price of supply for medical services should
cover the expenses of their provision and gives
the profit.
18. MEDICAL SSEERRVVIICCEESS MMAARRKKEETT
• As a result of the intersection of the interests of
consumers and producers aa ppooiinntt ooff mmaarrkkeett
eeqquuiilliibbrriiuumm is formed.
• The price at this point meets the needs of largest
number of producers and consumers of medical
services and, therefore, it is called ""tthhee
eeqquuiilliibbrriiuumm pprriiccee oorr mmaarrkkeett pprriiccee..""
19. Features ooff tthhee mmeeddiiccaall sseerrvviicceess mmaarrkkeett::
• 1. Number of sellers is limited; there are situations
that are close to a natural monopoly, that is limited
competition (limiting the number of vendors (in all
countries).
• This is produced by uniqueness and individuality of the
medical services and features of the professional ethics
of doctors.
• The medical profession requires a long training, and it's
often expensive
• It's complicated skilled labour. Licensing, accreditation
and certification are necessary.
• Typically, the number of medical facilities is limited, and
increasing their numbers is not justified economically.
20. Features ooff tthhee mmeeddiiccaall sseerrvviicceess mmaarrkkeett::
2. Imperfection (asymmetry) of information.
The patient does not have complete information
about their health status, methods of treatment.
The doctor prescribes the appropriate treatment.
21. Features ooff tthhee mmeeddiiccaall sseerrvviicceess mmaarrkkeett::
3. Heterogeneity of service quality.
Impossibility or difficulty of comparing prices
and quality.
In most cases, it requires the involvement of an
intermediary, paying the part of costs. In many
cases, the patient can not act as a supervisor of
the quality of treatment. For this purpose in the
system of "Doctor - Patient" is necessary entered
mediator (internal and external experts of the
quality of treatment).
22. Features ooff tthhee mmeeddiiccaall sseerrvviicceess mmaarrkkeett::
4. Many medical services are public goods not
only to in its moral - ethical assessments, but
also on economic characteristics.
We are talking about measures aimed at
protection and preservation of environment, a
system of sanitary - epidemiological surveillance,
prevention activities, and for some services – all
this is of obligatory character, for example,
compulsory vaccination.
23. Features ooff tthhee mmeeddiiccaall sseerrvviicceess mmaarrkkeett::
5. The need for state regulation of health
services.
WHO experts, having studied various models of
health care in many countries of the world,
consider the optimal model of financing the
following: state’s share of at least 60%, the share
is health insurance is not more than 30%, private
medicine - 10%.
24. Medical sseerrvviiccee aass aa ccoommmmooddiittyy
• Сommodity – is the product of labor, satisfying
some human need and not intended for their own
consumption and for sale or exchange.
The service differs from the commodity.
• Service - is any activity or benefit that one party
can offer another.
Service does not lead to seize oneself of anything.
25. Characteristics ooff sseerrvviicceess::
1. Intangibility. Service is can not seen, tasted,
heard or smelled to the date (moment) of
purchase. The buyer just has to trust the seller's
word.
2. Inseparability from the source. The service
does not exist without that entity, which it make,
on the contrary, commodity exist in itself.
Therefore it is sometimes important to show not
only a set of services but and those professionals
who work in the clinic.
26. Characteristics ooff sseerrvviicceess::
3. Instability of quality. Quality of service varies
according to the doctors, time and place of its
rendering. But one and the same doctor can treat
differently, depending on time of day, his physical
condition, availability of materials, drugs and
equipment, frame of mind.
4. Service can not be saved. For example,
massage help to relieve patients from back pain,
however, after a time its effect pass off.
27. The main eelleemmeennttss ooff mmeeddiiccaall sseerrvviiccee::
• Subjects of services: the patient - the health
worker (doctors);
• Psychology of service: the relationship of
subjects;
• Materiality: the financial and material expression
of the cost of satisfying of the consumer;
• Documentary: a fixed information about the
quantitative and qualitative sides of service was
performed .
28. TTyyppeess ooff sseerrvviicceess::
-Simple (single);
-Complex (integrated);
- Combined - is a combination of two or more
simple services, unrelated among
themselves.
29. SSeerrvviicceess mmaayy iinncclluuddee::
- Passive (in demand), such as disease which
was detected when applying for medical
assistance;
- Active (in the absence of demand), such as
preliminary and a periodic check-ups.
30. Market mechanism is functioning due to the
interaction of inter three components: demand, supply
and price.
• Supply is the relationship between the amount
of a good or service that businesses are willing
and able to make available and the price.
• Demand is the relationship between the amount
of a good or service that consumers are willing
and able to purchase and the price.
• Market price is the point at which supply and
demand cross.
31. Market Price Is Set by
Supply and Demand
Amount of Stuffed Animals
Price per animal
