a. Lower prices for inputs
b. Using fewer inputs per unit of output
c. Increasing efficiency
d. All of the above
37. It costs $5,000 to produce ten visits and $6,000 to produce 20. At a volume of 20,
a. average cost is $300 and marginal cost is $100
b. average cost is $500 and marginal cost is $100.
c. average cost and marginal cost are $300.
d. average and marginal cost cannot be calculated from these data.
38. A surgeon has an allowed charge of $5,000. Your insurer pays $3,000. You pay the balance and have travel costs of $1,000. From your perspective, what is the cost of the surgery?
a. $9,500
b. $9,000
c. $5,000
d. $3,000
39. It is important to distinguish between average and incremental cost
a. because managers need incremental cost data to make decisions about contracts.
b. because average and incremental cost are often quite different.
c. because most management decisions are incremental.
d. All of the above
40. An inefficient firm has costs that are higher than the quality of its product warrants.
a. True
b. False
were unchanged. As a result,
a. its infra-marginal costs will be lower.
b. its incremental costs will be lower.
c. its average costs will be lower.
d. All of the above
