CONSUMER THEORY

LAW OF DIMINISHING MARGINAL UTILITYIf Im hungry and eat a fluffel/hamburger, I get LOTS OF UTILITY (satisfaction, happiness points)If I eat a 2nd fluffel, I get less utilityIF I eat a 3rd, I get very little satisfaction.IF I eat a 4th, Ill probably be SICK

LAW OF DIMINISHING MARGINAL UTILITYThe more you get of something, the less you appreciate it.food, clothes, money, love (?)

EXCEPTION: HARD DRUGS (nicotine, heroin etc) especially CRACK (increasing marginal utility?)

DIMINISHING MARGINAL BENEFITSUTILITYQUANTITY14

MARGINAL BENEFITS vs MARGINAL COSTSUTILITYQUANTITYPRICEPrice=M CMB6MB>MCMC>MB10

MARGINAL BENEFITS vs MARGINAL COSTSUTILITYQUANTITYPRICEPrice=M CMB6MB>MCMC>MB10212

AS PRICE DROPS, DEMAND INCREASES FOR CRUSOE

QUANTITYPRICE612210As DEMAND CURVE

FRIDAY LIKES APPLES LESSQUANTITYPRICE6210Bs DEMAND CURVE1

JUST CRUSOE (A) & FRIDAY (B) IN SOCIETY

QUANTITYPRICE10210A+Bs DERIVED DEMAND CURVE18

DemandDoes not only depend on priceDoes not only depend on Economic VariablesIn Healthdepends on a multitude of factors.. Consider demand by the elderly for EMERBENCY ROOM SERVICES

PREDETERMINED FACTORSAGEGENDER & MARITAL STATUSINCOMEETHNICITIYAIR POLLUTIONHEALTH CARE PRACTICES- seat belts, crash helmetsSATISFACTION WITH HEALTH SERVICES

ENABLING FACTORSHEALTH INSURANCEAVAILABILITY OF GP CAREHOME HOSPITALIZATIONUSE OF PHYSICIAN GATEKEEPERS financial incentivesGEOGRAPHIC PROXIMITY TO ER, HOSPITAL and GP servicesSOCIAL SUPPORT NETWORKS

NEED FACTORSCANCERFALLS - 9.3% of all elderly er use in Israel.CARDIAC DISORDERSCHF, AMI, chest pain.DIABTESDEPRESSIONOCCULAR PROBLEMSOVERALL HEALTH STATUS

IMPROVED MODELHOSP USEADLSELFSELF-RATED HEALTH STATUSPREDETERMINEDEnabling

Diagnosis-based NeedsCognitionDepressionSocial IsolationLife StressesSI * Stress interactions