Health Economics Essay Example | Topics and Well Written Essays - 500 words - 1

Health Economics - Essay Example For instance, high level of technology, decrease in the cost of production, decrease in profit obtained from other goods, and an increased number of sellers in the market will shift the curve to the right side of equilibrium. All these factors will lead to a decrease in price of the drug in question since very little cost is used in production (Taylor & Weerapana, 2011). On the contrary, Mankiw (2011) argues that if the price of inputs increases, cost of production of other goods increases, level of technology diminishes, and the number of suppliers in the market reduces, then it is expected that price of the commodity increases. These factors will shift the supply curve on the left side of the equilibrium side as a result of negative change in the market prices. Additionally, increased prices of the drug will lower its demand since very few people will be able to purchase it. On the other hand, demand curve will be affected by a several factors. For example, increase in the expected value of the good, increase in the value of a substitute, decreased price of the complementary good, increase in the number of the potential consumers and increased earnings of the consumer will lead to increased demand. This will lead to the equilibrium shifting to the right. This will lead to increased value of the drug. Moreover, when there is a decrease in expected value of the commodity, increased value of the complementary commodity, a decrease in the price of the substitute; decreased number of potential consumers and decreased income of the consumer will lead to a downward change of the curve or the curve shifts to the left hence less demand. This decreases the price of the certain drug and supply will be down. Decrease in demand leads to flooding of a certain good in the market (Arnold, 2008). Several factors impact the degree of supply curve or demand curve shift (Graves & Sexton, 2006). First, monopoly or production