Chapter 8: Measuring Costs in Health and Health Care Sector

Question 1

Input costs that require a direct outlay of money by the medical firm.

Answer 1

Explicit Costs

Question 2

Input costs that do not require a direct outlay of money by a firm.

Answer 2

Implicit Costs

Question 3

The amount lost by not using the resources in its best alternative use.

Answer 3

Opportunity Cost

Question 4

____ consider only the explicit costs

Answer 4

Accountants

Question 5

____ consider both explicit costs and implicit costs

Answer 5

Economists

Question 6

Expenses plus depreciation charges for capital

Answer 6

Accounting Cost

Question 7

Accountants tend to take a ______ perspective, and only recognize costs when they are ALREADY made and properly recorded.

Answer 7

Retrospective (Look at things in the past that were previously recorded)

Question 8

Costs to a firm utilizing resources in production, including opportunity cost.

Answer 8

Economic Cost

Question 9

Economists take a _____ _____ perspective.

Answer 9

Forward Looking

Question 10

The difference between economic costs and accounting costs is

Answer 10

Opportunity cost

Question 11

The expenditure that has been made and cannot be recovered

Answer 11

Sunk Cost

Question 12

A time horizon over which the quantity of at least one factor input used in production process is FIXED

Answer 12

Short-Run

Question 13

This is the costs of production that does not vary with level of output or the cost paid by a firm in the business regardless of the level of output.

Answer 13

Total Fixed Costs (TFC)

Question 14

Costs that vary with output

Answer 14

Total Variable Costs (TVC)

Question 15

The sum of fixed costs and variable costs at each output level

Answer 15

Total Costs

Question 16

What is the formula for Total Costs

Answer 16

TC=TFC+TVC

Question 17

The way various measures of cost vary with the production level

Answer 17

Cost Structure

Question 18

These are additional costs incurred from producing one additional unit of output.

Answer 18

Marginal Costs

Question 19

The formula for Marginal Costs

Answer 19

The changes in total cost divided by the change in output produced.

MC = ∆TC/∆Q

Question 20

The total fixed cost divided by the number of units produced

Answer 20

Average Fixed Costs

Question 21

Formula for Average Fixed Costs

Answer 21

AFC = TFC/Q

Question 22

The total variable cost divided by the number of units produced

Answer 22

Average Variable Costs

Question 23

Formula for Average Variable Costs

Answer 23

AVC = TVC/Q

Question 24

The total of all fixed and variable costs divided by the number of units produced.

Answer 24

Average Total Cost

Question 25

Also refers to the cost per unit of output

Answer 25

Average Total Cost

Question 26

Formula for Average Total Costs

Answer 26

ATC = TFC + TVC / Q -or- ATC = TC / Q

Question 27

A time period over which all inputs in the production process are variable

Answer 27

Long-Run

Question 28

The LAC of producing a given level of outupt is always the lowest point of the _________

Answer 28

Short-Run Average Total Cost

Question 29

The LAC is the curve ____ to each short-run average cost

Answer 29

Tangent

Question 30

The U-Shape of the short run AC is based on

Answer 30

The law of Diminishing productivity

Question 31

The u-Shape of the long run cost curve is based on the concepts of

Answer 31

Long-run Economies and Diseconomies of Scale

Question 32

Refers to the notion that average costs fall as a medical firm gets physically larger due to specialization to labor and capital

Answer 32

Long-Run economies of scale

Question 33

When the average cost of production increases with the level of output.

Answer 33

Diseconomies of scale

Question 34

Measures the change in long-run total cost from a given change in output

Answer 34

The Long-run Marginal Cost

Question 35

The difference between total revenue and explicit cost

Answer 35

Business Profit

Question 36

The difference between total revenue and both explicit and implicit costs

Answer 36

Economic Profit

Question 37

TR>TC

Answer 37

Profit

Question 38

TR

Answer 38

Loss

Question 39

TR=TC

Answer 39

Break-even

Question 40

Loss

Answer 40

TR

Question 41

Profit

Answer 41

TR>TC

Question 42

Break-Even

Answer 42

TR=TC

Question 43

When P>ATC, a firm is

Answer 43

Earning Proft

Question 44

When P=ATC, a firm is

Answer 44

Breaking-even

Question 45

When TR=TC

Answer 45

Profit is Zero

Question 46

A firm should not shut down when

Answer 46

P>AVC

Question 47

The two Shutdown Points

Answer 47

P=AVC | P

Question 48

Optimum Productivity is found when

Answer 48

Marginal Costs = Price

Question 49

The curve of the TVC is caused by

Answer 49

The diminishing returns

Question 50

Total Variable Cost has zero value when ____ is also zero

Answer 50

output

Question 51

Total Variable Cost increases when _____ increases

Answer 51

output

Question 52

The _____ ______ curve starts the same point as the Total Fixed cost curve.

Answer 52

Total Cost

Question 53

The area between the TC and the TVC is the ______

Answer 53

TFC

Question 54

The AFC curve is continuously ______ as output ______, but (Does or Does not) touch the horizontal axis.

Answer 54

Declining; expands; does not

Health Economics (12 decks)

• Chapter 6: The Consumer Behavior
• Chapter 7: Production Concept in Health Care
• Chapter 4: Demand and Supply for Health and Health Care Services
• Chapter 5: Elasticity of Demand and Supply of Health Care
• Chapter 8: Measuring Costs in Health and Health Care Sector
• Chapter 9: Market Structure in the Health Sector
• Chapter 10: Economic Evaluation
• Chapter 12: Efficiency Exchange and Welfare Economics
• Chapter 13: Market Failure and Government Regulations
• Chapter 11: Economic Evaluation of Investment in the Health Sector
• Chapter 14: National Health Accounts of the Philippines
• Chapter 14: Classification of Taxes