QUESTION 1 Capitation is defined as payment per person that depends on the servi

Question

QUESTION 1

Capitation is defined as payment per person that

depends on the services provided

depends on lab work ordered by the primary care physician

does not depend on the services provided

none of the above

QUESTION 2

Economists consider which of the following costs to be irrelevant to a short-run business decision?

opportunity cost

out-of-pocket cost

historical cost

replacement cost

QUESTION 3

If the income elasticity of a particular good is negative 0.2, it would be considered

a superior good

a normal good

an inferior good

an elastic good

QUESTION 4

Economies of Scale are created by greater efficiency of capital and by:

longer chains of command in management

better wages for labor

smaller plant sizes

increased specialization of labor

QUESTION 5

When the law of diminishing returns takes effect

firms must add increasingly more input if they are to maintain the same extra amount of output.

firms must add decreasingly more input if they are to maintain the same extra amount of output.

more input must be added in order to increase its output.

a firm must always try to add the same amount of input to the production process.

QUESTION 6

The Cross-price-elasticity of demand for Tylenol and Aleve is likely to be

Greater than zero

Less than zero

Zero

Infinity

QUESTION 7

The distinction between sunk and incremental costs is most helpful in answering which question?

How many more people should be added to the production process?

What is the correct price to charge?

Should we begin to build a new factory?

Should we continue developing a new software application that we began last year?

QUESTION 8

The elasticity of demand for a product is likely to be greater

the smaller the number of substitute products available.

the smaller the proportion of one’s income spent on the product.

if the product is a luxury rather than an absolute necessity.

if the product is an imported good rather than a domestically produced good.

QUESTION 9

For the given cost functions, find MC and ATC,

TC = 20,000 +10Q

ATC = $10 & MC = $(20,000/Q) + 10

MC = $10 & ATC = $(20,000/Q) + 10

ATC = $10,000 & MC = $10

None of the above

QUESTION 10

If the price of a particular plastic surgery is increased and total revenue received from the sale of this procedure increases, then the price elasticity of demand is

elastic.

inelastic.

unitary.

None of the above.

depends on the services provided

depends on lab work ordered by the primary care physician

does not depend on the services provided

none of the above

Explanation / Answer

1) Capitation is defined as payment per person which depends upon the service provided.(as per the definition)

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