Regarding the production of health care,more recent studies suggest that:
A)economies of scale exist up to a hospital size of approximately 500 beds.
B)hospitals of many different sizes can compete effectively with each other on the basis of cost.
C)the LRAC curve exhibits significant diseconomies of scale beginning with a hospital size of approximately 100 beds.
D)the LRAC for hospitals exhibits a very distinct U shape.

Question

Quizplus · Accepted Answer

Recent studies suggest that hospitals of many different sizes can compete effectively with each other on the basis of cost. This implies that there may not be significant economies of scale in the production of health care, and smaller hospitals may be able to provide care at a lower cost compared to larger hospitals. While there may be some economies of scale up to a certain hospital size, the evidence suggests that these are not significant enough to outweigh the potential benefits of competition between hospitals of different sizes. Additionally, there is no clear evidence to suggest that the LRAC curve for hospitals exhibits a U shape or significant diseconomies of scale.

Regarding the Production of Health Care,more Recent Studies Suggest That