The Optimization of Education
The economic theory provides insights into the optimization of the level of education. The optimization achieved through marginal benefits from education, which should be equal to the cost of education for a standard level of education. The education required for being a doctor is time-consuming and expensive. Since the labor market is not elastic in the field of medicine, the supply of physicians is least likely to face structural changes.
Explanation
On the basis of this option, the cobweb model would best explain the criteria for choosing Jenny's area of interest and its viability in future. The cobweb theory depicts that the supply of labor requires some more time for modification, mostly an interval after experiencing the shift in the demand for labor. In the instance where there is a high demand, it is difficult to increase the labor supply because it is perfectly inelastic. In instances where there is a shortfall of labor, the supply is therefore perfectly inelastic.
The Business Cycle
The business cycle has four major stages, which are depression, recession, recovery, and prosperity. During recession and depression, the period prices of the goods and services are expected to decline, and hence bring losses to the companies. the recovery and boom periods are characterized by firms getting high profits due to the high price. Unemployment mainly entails individuals ready to work in existing jobs at the available wage rate but do not get work opportunities (De Grauwe, 2016). Unemployment increases during the depression period. Inflation, on the other hand, refers to the overall increase in price in the economy. In any state, an inflation of 5 % is healthy for the economy.
The International Comparative Theory
The international comparative theory explains that all nations in the world lack sufficient resources. Hence, the countries depend on each other. Some nations have specialized in the production of some goods since they have a low cost of production while others specialize in the other forms of production. hence, the international trade between the nations will help them to gain for mutual benefit. Exchange rates as used in economics is the rate at which one countries' currency is exchanged in comparison to another currency. The monetary policy is maintained by the central bank and looks at maintaining a stable price (Friedman, 2017). The central bank uses tools such as interest rate, demand and supply and the exchange rate to control inflation and other economic forces. The fiscal policy is maintained by the federal. The government hence has the power to fix the tax rate and gain its revenue. During recession, the government increases the aggregate demand through the increase of expenditure.
Elasticity of Demand
The knowledge of elasticity is critical when dealing with valuing decisions in a particular field, either medicine or business-related field. For instance, a private doctor gets a lower cost of administration costs for the state citizens. Bearing in mind that the citizens are in the same geographical location as where they attend medical services at the hospital, the cost even gets lower depending on the demand of medical care in the region (Palley, 2015). The elasticity of demand adds up to income for the private doctor increments while the administration costs are reduced. Bearing in mind that the demand is less elastic, the doctors gain more benefits by charging the patients an advanced cost.
Categories of Demand
In the occurrence that a healthcare facility differentiates its patients into diverse groups, with varying elasticities, they have the opportunity to charge every group depending on the elasticity of demand. The categories may be divided according to age, geographical location, sex or according to the insurance expenses. By understanding the cross-price elasticity, businesses are better placed in reducing the price of goods or services they offer lower than the real cost (De Grauwe, 2016). The leaders in the market experience losses as they capture the clients in their locality and purchasing goods and services in acquiring additional services to their business.
Forces of Demand and Supply in the Market for Doctors
What are the forces that influence the forces of demand and supply in the market for doctors?
The wide population entrance through ACA has brought healthcare transformation by offering insurance to an estimated forty million uninsured individuals in the United States. The Affordable Care Act is most likely to increase the demand for medical care services in hospitals in America (Friedman, 2017). As the physicians grow old in the labor market, the number of doctors who will retire at the same in the coming years is expected to be more than double the current number, unlike any other time.
The unequal distribution of doctors in the labor market varies according to the geographical regions. The number of doctors per every hundred people is dependent on the available doctors who are willing to work in a certain region at the current wage rate (De Grauwe, 2016). The countryside regions are most likely to experience inadequacy due to the low population and availability of health services.
The enrollment in health schools has been on the rise, and hence more doctors are likely to join the labor market. The enrolment in health schools increased by forty percent in 2015 in comparison to 2002 as indicated by the AAMC data. Moreover, the enrollment in health schools is expected to maintain a consistent trend in future and will see more students enrolling in future (Palley, 2015). The students like the Caribbean based schools will be influenced by this margin and will continue with more enrollments.
A reduced amount of interest by the former students in health schools is likely to influence the primary care. By not predictable growth in health school, students may cause a deficit in sectors like primary care unless there are reforms in payments so as to give confidence to the instituted primary care residents. The number of health school graduates enrolling in primary care has declined by thirty-one percent since the year 2000 (Friedman, 2017). The decline has also affected the osteopathic health graduates, with a fall of twenty percent. Nevertheless, due to this reason, it is noteworthy that the growth in osteopathic health graduates is as a result of the reduction in primary care graduates, who have specialized in other areas as they seek a higher pay.
The residency vacancies may not allow a higher number in the health schools. There is an expected anxiety over the inadequate nationality slots for the alumni of the medical school in the United States. The Contemporary Medicare caps on health education graduates compels the anxiety in such a situation and calls for the AAMC to be vocal on such matters (Hirst, Thompson, " Bromley, 2015). Though the number of residency and the fellowship slots may be limited, the number of graduates has grown by eighteen percent between the year 2000 and 2009. The development in subspecialty preparation accrues for forty-three percent of the expansion in the health sector.
Recommendations
The supply of doctors in the market follows the same situation. The skills of a doctor take time to be developed as demanded by hospitals. In the present times, the current supply of doctors cannot be altered. Hence the market clears by swiftly increasing the wage rate. In case a student acquires the skills of a doctor, the demand of the doctors in the labor market shifts and hence the new doctors have to accept the current wage in the market provided by the hospitals.
When deciding the suitable field of study, it is also important to consider the work-life balance for the preferred job. The recently graduated doctors value their jobs and advocate for a balance with their families, hence like fewer hours of work. A larger percentage of the time for physicians is spent at work, with little time spent with family and relatives due to the nature of work, and hence the doctors are in a pole position of making extreme and significant decisions of their jobs. Jenny should consider the economic forces which might be in play in determining the availability of job opportunities as well as unemployment levels in her field (Friedman, 2017). The inflation rate plays a role in the remuneration of doctors and the productivity of the labor forces upon graduating from the health schools. Other uncertainties include government action and spending, for instance, the influence of ACA that was passed in 2010 by the government, has a direct impact on doctors and the department of health as a whole.
References
De Grauwe, P. (2016). Economics of monetary union. Oxford university press.
Friedman, M. (2017). Quantity theory of money. The New Palgrave Dictionary of Economics, 1-31.
Hirst, P., Thompson, G., " Bromley, S. (2015). Globalization in question. John Wiley " Sons.
Palley, T. I. (2015). Money, fiscal policy, and interest rates: A critique of Modern Monetary Theory. Review of Political Economy, 27(1), 1-23.
