Chapter 8: Measuring Costs in Health and Health Care Sector Flashcards
Input costs that require a direct outlay of money by the medical firm.
Explicit Costs
Input costs that do not require a direct outlay of money by a firm.
Implicit Costs
The amount lost by not using the resources in its best alternative use.
Opportunity Cost
____ consider only the explicit costs
Accountants
____ consider both explicit costs and implicit costs
Economists
Expenses plus depreciation charges for capital
Accounting Cost
Accountants tend to take a ______ perspective, and only recognize costs when they are ALREADY made and properly recorded.
Retrospective (Look at things in the past that were previously recorded)
Costs to a firm utilizing resources in production, including opportunity cost.
Economic Cost
Economists take a _____ _____ perspective.
Forward Looking
The difference between economic costs and accounting costs is
Opportunity cost
The expenditure that has been made and cannot be recovered
Sunk Cost
A time horizon over which the quantity of at least one factor input used in production process is FIXED
Short-Run
This is the costs of production that does not vary with level of output or the cost paid by a firm in the business regardless of the level of output.
Total Fixed Costs (TFC)
Costs that vary with output
Total Variable Costs (TVC)
The sum of fixed costs and variable costs at each output level
Total Costs
What is the formula for Total Costs
TC=TFC+TVC
The way various measures of cost vary with the production level
Cost Structure
These are additional costs incurred from producing one additional unit of output.
Marginal Costs
The formula for Marginal Costs
The changes in total cost divided by the change in output produced.
MC = ∆TC/∆Q
The total fixed cost divided by the number of units produced
Average Fixed Costs
Formula for Average Fixed Costs
AFC = TFC/Q
