ABSTRACT
This chapter provides further background on health economics and health economists. It also provides overview of the magnitude and importance of the health care sector and with an introduction to some major policy concerns. The chapter aims to promote the theme that economics helps explain how health care markets function. It focuses on methods used in economic analyses and address two recurring questions: Is health care different, and does economics apply? Despite stressing the distinctive features of health care services and markets, the chapter examines the values of improvements to our health in both consumption and production. It identifies many distinctive features of economics: scarcity of societal resources, assumption of rational decision making, concept of marginal analysis, and use of economic models. Economic models are often abstract. Abstract models help to make sense of the world, in economics as in everyday life. Many observers complain that economics is irrelevant to the study of health.