Suppose we allocate a budget for flu shots between physicians and licensed physician assistants. Let MBP equal the marginal benefit from physician administering flu shot and MCP equal the marginal cost of physician administering flu shot. Let MBA equal the marginal benefit from physician assistant administering flu shot and MCA equal the marginal cost of physician assistant administering flu shot.
-Assume that the marginal cost of a physician is constant at $500 per hour. The marginal cost of a physician assistant is constant at $50 per hour. Productivity in terms of flu shots per hour is as shown in the following table. ?
Currently, 1 physician hour and 2 assistant hours are employed giving flu shots. We can correctly conclude that
A) too many flu shots are being given by physician assistants.
B) too many flu shots are being given by physicians.
C) too many flu shots are being given by physician assistants relative to physicians.
D) too many flu shots are being given by physicians relative to physician assistants.
E) an optimal allocation cannot be found.
Correct Answer:
Verified
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