Test Bank Chapter 11 Healthcare Production and Costs

Dewar ASQZ

Chapter 11

Fill-in-the-Blank

1. Production and sale of healthcare goods take place in a world of ________________ resources, and theories are needed to understand the operation and planning process of medical firms.

<Answer: scarce>

<Complexity: Moderate>

<A-head: Introduction>

<Subject: Chapter 11, Page 85>

Matching

2. Match the terms to the appropriate definition.

[1] Identifies how various inputs can be combined and transformed into a final output.

<Answer: Production function>

[2] Where total output at first increases at an expanding rate but after some point increases at a decreasing rate with respect to a greater quantity of a variable input, holding all other inputs constant.

<Answer: Law of diminishing marginal returns>

[3] There is a possibility that too many labor inputs can lead to a reduction in the quantity of healthcare services due to inefficiencies in production.

<Answer: Law of diminishing productivity>

[4] Illustrates the rate at which one input substitutes for the other in the production process at the margin.

<Answer: Marginal rate of technical substitution>

<Complexity: Difficult>

<A-head: The Nature of Production>

<Subject: Chapter 11, Page 85>

Matching

3. Match the terms to the appropriate definition.

[1] Easily identified because a recent market transaction is available to provide an accurate measure of costs or money spent for the goods or services acquired.

<Answer: Explicit costs>

[2] Reflects the opportunity costs of using any resources the medical firm owns.

<Answer: Implicit costs>

[3] Quantity of labor inputs are multiplied by the wage.

<Answer: Short-run total variable costs>

[4] Relates the quantity of output to the cost of production.

<Answer: Cost theory>

<Complexity: Difficult>

<A-head: Short-Run Costs for a Medical Firm>

<Subject: Chapter 11, Page 87>

Fill-in-the-Blank

4. There is a _________________ relationship between the short-run total cost function and the short-run total product curve.

<Answer: reciprocal>

<Complexity: Moderate>

<A-head: Short-Run Costs for a Medical Firm>

<Subject: Chapter 11, Page 87>

Multiple Response

5. Which of the following are short-run circumstances that affect the position of the total cost curve?

[1] Prices of fixed inputs

[2] Quality of care

[3] Patient case mix

[4] Amounts of variable inputs

<Answer: 2, 3>

<Complexity: Difficult>

<A-head: Short-Run Costs for a Medical Firm>

<Subject: Chapter 11, Page 87>

Multiple Choice

6. Which of the following refers to the notion that average costs fall as a medical firm gets physically larger due to specialization of labor and capital?

[1] Economies of scale

[2] Diseconomies of scale

[3] Increasing returns to scale

[4] Constant returns to scale

<Answer: 1>

<Complexity: Moderate>

<A-head: Long-Run Costs>

<Subject: Chapter 11, Page 88>

Multiple Choice

7. Which of the following results when an increase in all inputs results in a more-than-proportionate increase in output?

[1] Economies of scale

[2] Diseconomies of scale

[3] Increasing returns to scale

[4] Constant returns to scale

<Answer: 3>

<Complexity: Moderate>

<A-head: Long-Run Costs>

<Subject: Chapter 11, Page 88>

True/False

8. The production function allows for the possibility that each level of output may be produced by several different combinations of the personnel and capital inputs.

<Answer: True>

<Complexity: Easy>

<A-head: The Nature of Production>

<Subject: Chapter 11, Page 85>

True/False

9. One important microeconomic principle from production theory is the law of short-run total variable costs.

<Answer: False>

<Complexity: Easy>

<A-head: The Nature of Production>

<Subject: Chapter 11, Page 86>

True/False

10. In general terms, the elasticity of substitution between any two variable inputs that are substitutable equals the percent change in input ratio divided by the percent change in the ratio of the inputs’ marginal productivities, holding the level of output constant.

<Answer: True>

<Complexity: Easy>

<A-head: The Nature of Production>

<Subject: Chapter 11, Page 86>