Chapter 7: Production Concept in Health Care Flashcards
Goods and services cannot be produced without utilizing the factors of production such as
Land, labor, capital, and entrepreneurship
Critical decisions/questions made when it comes to health care sector
What services/goods should be given priority - vaccination program or improved housing conidtions?
How much of which services/goods should be produced first?
Transformation of inputs into outputs
Production
The result that has been created by the inputs
Output
The factors of production are called the
inputs of production
What are the two types of outputs
Goods and Services
Is the process by which inputs are turned into outputs
The technology of a firm
Factors of production are classified into
Fixed Factor and Variable Factor
Remains constant regardless of the volume of production
Fixed Factor
Changes in accordance with the volume of production
Variable Factor
Two aspects of the production decision
The ability to produce
The willingness to produce
Prescribed by resources availability (related to resource costs) and state of technology
The ability to produce
Prescribed by the profit incentives (production benefits relative to production cost)
The willingness to produce
Technical name given to a relationship between quantities of various inputs used and the maximum output that can be produced with those inputs used per unit of time.
The production Function
Shows what is technically feasible when the firm operates efficiently
the production function
The quantities of one or more production factors cannot be changed or that the use of at least one factor of production cannot be changed.
Short-Run
Also known as fixed inputs
Short-Run
All factors can be chagned
Long-Run
The three production conepts
Total Product TP
Marginal Product MP
Average Product AP
Refers to the total amount of medical services or goods produced
Total Product
The output per unit of a particular product is obtained by dividing total product by its corresponding units of labor.
Average Product
Measures the productivity of labor in terms of how much, on average, each laborer can perform.
Average Product
The extra product or output added by 1 extra unit of that input while other inputs are held constant
Marginal Product
It is considered as the slope of the Total Product Curve
Marginal Product
When the total product curve reaches its saturation, marginal product is
zero
At the declining portion of total product, the marginal product is
negative
Falling portion of the marginal product is the so-called
law of diminishing marginal returns
When marginal product is grater than average product
MP > AP
The average product _____ as labor ______
Increases; Increases
When marginal product is equal to average product
MP=AP
The average product is _____
Constant
When marginal product is less than the average product
MP < AP
The average product will _____ as labor input ____
Fall; Increases
Describes a pattern in most production portion in the short-run.
Law of Diminishing Marginal Returns
Meaning “Equal” in greek
Iso
Short of Quantity
Quant
Curve which shows all possible combinations of inputs that yield the same level of output
Isoquant
Characteristics of Isoquant curve
Isoquants further from the origin represent greater output levels
Isoquants do not intersect
Isoquants are usually convex to the origin
Isoquants are negatively sloped
Why are Isoquants usually convex to the origin
Because of the Diminishing Marginal Rate of Technical Substitution
When a producer is willing to give up less and less of capital to gain additional amount of labor and still lie on the same isoquant.
Marginal Rate of Tehnical Substitution
Straight line showing the different combinations of capital and labor that a firm can purchase or hire given his total outlay and the factor prices
Isocost
A series of isocost lines
Isocost map
Relates the change in output to a proportionate change in the amount of input used
Return to Scale
when a percentage increase in all factor inputs leads to a greater percentage in output
Increasing return to scale
When a percentage increase in all factor inputs leads to a proportionately equal increase in output.
Constant Returns to scale
When a percentage increase in all factors inputs leads to a less than proportional increase in output.
Decreasing return to scale
Tagalog expression meaning “new heroes”
Bagong Bayani
