Emerging Infectious Disease ISSN: 1080-6059

Applying Economic Principles to Health Care

R. Douglas Scott*

, Steven L. Solomon*, and John E. McGowan†

Author affiliations: *Centers for Disease Control and Prevention, Atlanta, Georgia, USA; †Emory University, School of Medicine, Atlanta, Georgia, USA

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Figure 1

Figure 1. Supply and demand curves.

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¹A complicating factor omitted from the discussion is time. In a longer view of time, all fixed inputs are considered variable and can be redeployed to some other productive process. Therefore, fixed costs must be covered in the long run. Since fixed costs are 'sunk" costs (spent before production even begins), it makes sense to keep operating for short time periods (as opposed to shutting down all production) if variable costs are covered.

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