Deck 7: Medical Care Production and Costs

Question 1

In the short run, the average fixed cost of production _______ as the quantity of medical services _______.

A) decreases; decreases
B) increases; increases
C) doesn't change; increases
D) doesn't change; decreases
E) decreases; increases

Answer 1

E

Question 2

_______ reflect the alternatives given up by using resources to produce medical services.

A) Marginal costs
B) Fixed costs
C) Explicit costs
D) Implicit costs
E) Variable costs

Answer 2

D

Question 3

Assuming that a hospital seeks to minimize total costs, what should it do if the marginal productivity per dollar spent on nurses is less than the marginal productivity per dollar spent on physicians?

A) The hospital should utilize more nurses and fewer physicians.
B) The hospital should utilize fewer nurses and more physicians.
C) The hospital should utilize fewer nurses and fewer physicians.
D) The hospital should utilize more nurses and more physicians.
E) There is not enough information to determine the appropriate action.

Answer 3

B

Question 4

If the marginal product is greater than the average product of physicians, then the average product of physicians must be increasing.

Question 5

The _______ of nurses is represented as the total amount of medical services produced divided by the total amount of nurse-labor.

A) marginal product
B) marginal cost
C) average product
D) opportunity cost
E) none of the above

Question 6

If the average product of dental assistants is _______, then the marginal product of that labor must be _______ its average product.

A) increasing; less than
B) decreasing; equal to
C) decreasing; less than
D) increasing; equal to
E) decreasing; greater than

Question 7

_______ occur when the cost of producing a medical service decreases as the quantity produced increases.

A) Economies of scale
B) Economies of scope
C) Diseconomies of scale
D) Diseconomies of scope
E) None of the above

Question 8

_______ occur when the cost of producing two outputs is less than the sum of the costs incurred when producing each output individually.

A) Economies of scale
B) Economies of scope
C) Diseconomies of scale
D) Diseconomies of scope
E) None of the above

Question 9

Short-run average variable costs decrease initially, but then begin to rise due to diminishing marginal productivity of labor.

Question 10

Which of the following best explains why production might increase at a decreasing rate with the addition of a variable input?

A) Increasing marginal opportunity costs
B) Increasing marginal productivity of labor
C) Diminishing marginal productivity of labor
D) Advancements in technology
E) Diminishing marginal opportunity costs

Question 11

The _______ of nurses is represented as the change in medical services provided by an additional unit of nurse-labor.

A) marginal product
B) marginal cost
C) average product
D) opportunity cost
E) none of the above

Question 12

If a hospital is cost-minimizing, then the marginal productivity per dollar spent on physicians must be equal to the marginal productivity per dollar spent on nurses.

Question 13

In the short run, if the marginal cost of production is equal to the average total cost of production, then the average total cost is _______.

A) less than the average variable cost
B) less than the average fixed cost
C) maximized
D) minimized
E) equal to the average variable cost

Question 14

If a hospital is experiencing diseconomies of scale, it can reduce the average total cost of production by producing a greater quantity of medical services.

Question 15

Previously paid sunk costs do not factor into most decisions since they can't be recouped.