Questions1Illustrate the trade-off betweenmedical staff.principlesoptimaladministratorsandExplaininvolved in obtainingsituation. How would this situation beaffected by an increase in the pay ofdoctors and nurses?theeconomicanWhatencounteredproblemsinmightdeterminingbethissolution in practical terms? The National Health Service (NHS) in the UK was founded in 1948 and was the first state-run freehealth service in the world. It originated at a time of national euphoria following victory in World WarII, which generated a sense of confidence and solidarity among politicians and public. In particular itwas felt that class distinctions were finally disappearing. The extensive rationing of products, bothduring and after the war, played a big part. Not only did this result in queuing for goods by rich and pooralike, but it gave the government a sense that state control of distribution was not only possible but inmany cases desirable. The basic objective was to provide all people with free medical, dental andnursing care. It was a highly ambitious scheme that rested on various premises that have since provedflawed. These were:1 The demand for health care was finite; it was assumed that some given amount of expenditure wouldsatisfy all of the nation's health wants.2 Health care provision could be made independent of market forces; in particular doctors were notsupposed to consider costs in deciding how to treat individual patients.3 Access to health care could be made equal to all;This means that there would be no preferential treatment according to type of customer, in particularaccording to their location. The flaws became more obvious as time went by, and were aggravated bythe fact that the system was based on the old pre-war infrastructure in terms of facilities. This meant thatthe provision was highly fragmented, with a large number of small hospitals and other medical centers.The first flaw became apparent very quickly: in its first nine months of operation the NHS overshot itsbudget by nearly 40 per cent as patients flocked to see their doctors for treatment. Initially it wasbelieved that this high demand was just a backlog that would soon be cleared, but events provedotherwise. Webster, the official historian of the NHS, argues that the government must have had littleidea of the 'momentous scale of the financial commitments' which they had made. Since its foundation,spending on the NHS has increased more than fivefold, yet it has still not kept pace with the increase indemand. This increase in demand has occurred because of new technology, an ageing population andrising expectations. At present it is difficult to see a limit on spending; total spending, public and private,on healthcare in the USA is three times as much per person as in the UK. However, when it comes toperformance compared with other countries the UK does not fare that badly. In spite of far largerspending in the USA, some of the basic measures of a country's health, such as life expectancy andinfant mortality, are broadly similar in the two countries. The United States performs better in certainspecific areas, for example in survival rates in intensive-care units and after cancer diagnosis, but eventhese statistics are questionable. It may merely be that cancer is diagnosed at an earlier stage of thedisease in the USA rather than that people live longer with the disease. Performance can also bemeasured subjectively by examining surveys of public satisfaction with the country's health serv1996 OECD study of public opinion across the European Union found that the more of its income that acountry spends per person on health, the more content they are about the health service. This showedthat, although the British are less satisfied with their health service than citizens of other countries arewith theirs, after allowing for the amount of spending per head the British are actually more satisfiedthan the norm. Italy, for example, spends more per head, yet the public satisfaction rating is far lower.There are a number of issues that currently face the NHS. The most basic one concerns the location ofA

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1. Isoquant is a graph showing combination of factors or trade off of two products or variables,…

1 Illustrate the trade-off between administrators and medical staff. Explain the involved in obtaining situation. How would this situation be principles an optimal economic affected by an incr ase in the nay of