Question

QUESTION 5 The Health Planners’ Evaluation of the Physicians Supply survey found that there was a surplus of practicing physicians in the U.S. in the 1960’s.

True False0.5 points (Extra Credit)

QUESTION 6 According to the inverse relationship between productivity and cost, as productivity increases, cost decreases.

True False0.25 points

QUESTION 7 Diminishing productivity means that as more workers are crowded into a medical facility, the quantity of services produced begins to increase.

True False0.25 points

QUESTION 8 The short run total cost curve is derived by summing the short term variable costs and the short term fixed costs.

True False0.25 points

QUESTION 9 According to the law of diminishing returns, total output first increases at an increasing rate, but after some point increases at a decreasing rate.

True False0.25 points

QUESTION 10 Restricting the supply of physicians increases the price of physician visits.

True False

Answer 1

Solution

Question 6

TRUE, because as the productivity increases means the resources are used much more efficienly to produce output with given input. That will definitely decreases the cost. So there is an inverse relationship between productivity and cost. When productivity increases, cost decreases and vice versa.

Question 7

FALSE, diminishing productivity means when more workers are employed then productivity start declining. It will not increase the quantity of services, rather reduce it. Because if the firm want to increase its output , and its only inreases the variable input (labour) then at some point its output begins to decline.

So diminishing productivity means, quantity of services begin to decrease.

Question 8

TRUE, Short run total cost = Short run variable cost + Short run fixed cost

Question 9

TRUE, Acoording to law of diminishing returns or law of variable proportion, total output increases with increasing rate initially but after some point it increases with decreasing rate. This law operates in short run, where the firm can only change the variable factors of production and not the fixed factors of production. So initially if the firm increases is variable factors of input, it will increase the output with increasing rate. But if the firm keep on increasing only variable part then productivity starts decline. Then total ouput increases with deceasing rate. Beacause in order to increase production continuously it is also necessary to increase the fixed factors of production, which can be done in long run.

Questiion 10

TRUE, by restricting  the supply of physicians, the price of physicians visit will increase. Now less number of physicians are available per patient. So patient has no choice but to pay whatever be the fee of physician. In that case the the price of physicians visit will increase. When the supply is short, it increase the price for consumer.