Economics for Healthcare Managers, Third Edition
Economics for Healthcare Managers, Third Edition
3rd Edition
ISBN: 9781567936766
Author: Robert H. Lee
Publisher: Health Administration Press
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Chapter 5, Problem 7E
To determine

Calculation of average and incremental cost.

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You are comparing replacing the current lab, which has a cost function of C = 200,000 + 25 × Q, with an automated lab that has a cost function of C = 300,000 + 20 × Q. Doing so would reduce the error rate from 1.5 percent to 1 percent. Your volume is expected to be 18,000 tests per year. Should you choose the automated lab? Briefly explain your logic.
As medical terminology continues to develop, will the marginal product activity of each additional dollar spent on it increase or decrease? What about the average productivity per dollar spent on medical care?
Why have economic analyses of clinical and administrative innovations become more important?
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