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DEN011 - Health Economics > SAS12: Production Concept in Health Care > Flashcards

SAS12: Production Concept in Health Care Flashcards

1
Q

It is the creation of goods and services using the inputs of production.

A

Production

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2
Q

This is the physical relationship between the inputs and outputs of goods and service.

A

Production Function

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3
Q

What is the formula for Production Function?

A

Q = f ( X )

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4
Q

What does Q and X represent in Q = f ( X )?

A

Q = output & X = input

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5
Q

This refers to the goods and services that have been created using the production inputs.

A

Outputs

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6
Q

This refers to the factors of production which include land, labor, capital and entrepreneurship.

A

Inputs

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7
Q

What are the 2 types of Inputs of Production?

A

Fixed Input & Variable Inputs

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8
Q

These are those that don’t change no matter how much or how little is produced. (Ex. land and capital)

A

Fixed Input

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9
Q

These are the ones that change depending on the volume or amount of production. (Ex. labor and entrepreneurship)

A

Variable Inputs

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10
Q

What are the 2 aspects of Production Decision?

A

The ability to produce & the willingness to produce

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11
Q

This production decision is prescribed by resources availability and state of technology.

A

The ability to produce

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12
Q

This production decision is prescribed by the profit incentives.

A

The willingness to produce

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13
Q

In this, 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.

A

Short-run

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14
Q

In this, all factors can be changed.

A

Long-run

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15
Q

This states that as “quantities of one variable factor are increased, while other factor inputs remain constant, all things being equal, a point is reached beyond which the addition of one more unit of the variable factor will result in a diminishing rate of return and the marginal physical product will fall.”

A

The Law of Diminishing Marginal Returns

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16
Q

This refers to the total production or output.

A

Total Product

17
Q

It is the additional output produced by employing one additional unit of input holding the level of usage of all other inputs constant.

A

Marginal Product

18
Q

What is the formula for Marginal product?

A

MP = △TP / △X or MP = △Q / △X

19
Q

It is the output produced per unit of the input.

A

Average Product

20
Q

What is the formula for Average Product?

A

AP = TP / X

21
Q

The falling portion of the marginal product is called?

A

The Law of Diminishing Marginal Returns

22
Q

What are the Assumptions of the Law of Diminishing Marginal Returns?

A

No Change in Technology, Short Term, Homogenous Units, and Measurement of Product

23
Q

The law assumes that the progressive increase in the input is not accompanied by any change in the
techniques of production.

A

No Change in Technology

24
Q

It is unlikely that all the other variables factors of production will remain unchanged over a long period of time, making the law inapplicable in long term scenarios.

A

Short Term

25
Q

The law assumes that the units of all the variable factors of production are equal.

A

Homogenous Units

26
Q

The law assumes that the output of the production process can be measured or quantified in physical units, such as kilograms, liters or number of units.

A

Measurement of Product

27
Q

This stage of production in the law of diminishing returns is characterized by tremendous growth.

A

Stage One

28
Q

This stage of production in the law of diminishing returns is when the marginal returns start decreasing.

A

Stage Two

29
Q

This stage of production in the law of diminishing returns is the final stage. During this stage, the marginal returns become negative.

A

Stage Three

30
Q

It shows the different combinations of capital and labour that give the same output (TPP).

A

Isoquant

31
Q

What does TPP mean?

A

Total Physical Product

32
Q

It is usually shaped concave because of the law of diminishing returns.

A

Isoquant

33
Q

This is the amount of one factor that can be replaced by one factor.

A

Marginal Rate of Substitution

34
Q

What is the formula for Marginal rate of factor substitution?

A

MRS = △K / △L

35
Q

It shows all the combination of factors that cost the same to employ.

A

Isocost

35
Q

It shows different levels of output.

A

Isoquant Map

36
Q

This is when a firm will wish to produce at the point of the highest possible isoquant and minimum possible isocost.

A

Profit Maximization

DEN011 - Health Economics (7 decks)

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