Write a 1250 word paper answering; As a result, many diseases that were considered deadly a few years ago are effectively curable today. As an important example of these improvements, prescription drugs have leapfrogged in the health industry in ways that in some cases they have even reduced the occurrence of surgery (Kimbuende et al, 2010).
This paper attempts to discuss customer demand for prescription medicines in connection with the variables of cost and supply in the USA. The major question we, at the very start, come across is if the theories of economics fit well in case of healthcare. According to Scott II (2001), the actual application of the concepts and theories of economics are not a straightforward exercise. The application of economics to healthcare theories is a complex question and therefore, the results found in research can not always be dependable. However, there are two major economic concepts that apply well to the case of healthcare: (1) Allocation of Scare Resources and (2) Economic Efficiency (Scott II, 2001).
In case of our health care product, prescription medicines, these two notions are the most obvious. Thus, as far as the allocation of resources is concerned, more and more is being devoted to the production of such magical potions to produce even better products and at lower costs (Scott II, 2001). With the discovery of every new disease more allocation of resources takes place in the prescription drugs industry, not to forget that in most of the cases prescription drugs are more than necessity. Moreover, increased competition in the drug industry demands the firms to be more efficient in their production. The question then arises if there is any relevance of the forces of demand and supply in the prescription drugs markets. it has been observed that an increase in the market prices for prescription drugs serves as a signal to the producers that they are in demand and the supply is thus triggered (Scott II, 2001).