HEN 368Health Economics

Lecture 4

Buyers

0

5

10

15

20

25

30

35

40

Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki

2628

3032

3436

3840

Price29

Price35

Riyadh Pizza Market

Sellers

0

5

10

15

20

25

30

35

40

Dominos Pizza Hut Dr Gale

30

25

20

Price29

Price35

Riyadh Pizza Market

Always Two Values in a trade

Difference between what I am willing to pay for and the price

Difference between what I am willing to sell for and the price

How many firms does it take for competition?

Only One

As long as they can enter the market

Marshmallow

Video

How many marshmallows would

you have in 24 hours if you started with one

and they were doubled every 15 minutes?

296

x 1,200

79,228,162,514,264,300,000,000,000,000

Productivity

Outputdivided by

Input

How do we go from this...

to this?

1800 2010 Change

Population one billion seven billion 7x

Life Expectancy 26 years 66 years 40 +

GDP Per Capita Per Day $3 $30 10 x

GDP: $70,000,000,000,000 Population: 7,000,000,000GDP Per Capita: $10,000

GDP Per Capita

Source:https://www.google.com.sa/publicdata/explore?

ds=d5bncppjof8f9_&met_y=ny_gdp_mktp_cd&tdim=true&dl=en&hl=en&q=world%20gdp#!ctype=l&strail=false&bcs=d&nselm=h&met_y=ny_gdp_pcap_cd&scale_y=lin&ind_y=false&rdim=region&ifdim=regi

on&tdim=true&hl=en_US&dl=en&ind=false

One word

Productivity

Why do Standards of Living

differ?

Better atmaking stuff

Productivity

What people want

What is Wealth?

Anything that helps you create wealth

What is Capital?

CulturalHumanPhysical

IntellectualFinancial

Five Types of Capital

Cultural Capital

Worldview

Political

Legal

Economic

How people view and treat other

people

Expectations

Cultural Capital

Property RightsRule of Law

Political StabilityNo peace ... No prosperity

Cultural Capital

Free to Trade

Human Capital

I look for three things in hiring people.

The first is personal integrity, the second is

intelligence, and the third is a high energy level.

But of you don’t have the first, the other two will kill

you.

- Warren Buffett, CEO, Berkshire Hathaway

IntegrityCompetence

Trust

Lying about your competence

Why is cheating so bad?

Trust Knowledge and SkillsHealth and NutritionSocial Relationships

Human Capital

Health & Nutrition

Two typesTools

Natural ResourcesWater, Oil, Minerals

Physical Capital

Tools we use to make stuff

Natural ResourcesRenewable

Non-renewable

Physical Capital

IdeasTechnology

How the world works

How we get smarter making things and making things smarter

Intellectual Capital

Research and Development

Patent System

20 Year Monopoly on your idea

Human CapitalIntellectual Capital

Money

Allows us to store labor and shift time

Financial Capital

Savingsversus

Consumption

Spend or Save?

Save instead of consumeInvestment in new capital

Increase productivity

Three Steps

Capital Allocation

Right capital at the right time

Innovation - Productivity

Continuous Innovation

Each year in school adds 10 percent to

income

Invest versus consume

Education

Productivity Growth

More people

More ideas

More innovation

More wealth