Chapter 8 Final Questions

Implicit costs are:

"payments" for self-employed resources

If you know that total fixed cost is $200, total variable cost is $600, and total product is 4 units, then average total cost must be:

$200

If the demand for hospital visits in a city are 10,000 and a typical physician office can accommodate 50 patients per day, the number of physician offices is

200

Diminishing marginal returns occurs as a firm adds more variable inputs to at least one fixed input because:

As more variable inputs are hired, the amount of the fixed input per variable input decreases

When a dental office reports that the productivity of 15 workers working at the office is 12 patients per month per worker, it is referring to the:

Average product of labor

A perfectly elastic demand curve implies that the firm:

can sell as much output as it chooses at the existing price

A competitive firm in the short run can determine the profit-maximizing (or loss-minimizing) output by equating:

marginal revenue and marginal cost.

The demand schedule or curve confronted by the individual, purely competitive firm is:

perfectly elastic.

Hospitals compete mainly in a _________ market.

Geographic market

The cost of a national health insurance program would be____ and the availability of services _______ when supply is more ________.

Greater; diminished; inelastic

Marginal product of labor refers to the:

Increase in output resulting from employing one more unit of labor

A hospital is experiencing economies of scale, if

Its average cost curve is negatively sloped as output increases.

Monopolistic competition is described as

Many differentiated firms and intense price competition

The marginal cost curve is upward sloping because

Marginal productivity is falling with production

An industry comprised of a very large number of sellers producing a standardized product is known as:

Monopolistic competition

Which market structure is characterized by a large number of differentiated firms? (Hint: see page 177 of the textbook)

Monopolistic competition

Which would be an implicit cost for a firm? The cost

Of wages foregone by the owner of the firm

In the short run, a purely competitive firm will always make an economic profit if:

P > ATC

Which of the following statements is correct?

The demand curve for a purely competitive firm is perfectly elastic, but the demand curve for a purely competitive industry is downsloping

When the patient lacks information, the physician demand curve _____.

Becomes less elastic

Variable costs are:

Costs that change with the level of production

Economies of scale

Depend on the spreading of minimal fixed costs over a number of procedures.