The LAC and LMC Curves in the Diagram Below Are

question 154

Multiple Choice

The LAC and LMC curves in the diagram below are consistent with a production function that exhibits

• A) decreasing returns to scale.
• B) constant returns to scale.
• C) increasing returns to scale.
• D) increasing returns to scale for small levels of output, then constant returns to scale, and eventually decreasing returns to scale as output increases.
• E) decreasing returns to scale for small levels of output, then constant returns to scale, and eventually increasing returns to scale as output increases.

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Definitions:

Insurance Companies

Businesses that provide coverage against financial loss from specified risks in exchange for premiums.

Cooperating Doctors

Doctors who work together or with other healthcare professionals and organizations to provide coordinated and comprehensive care.

Health Maintenance Organizations

Managed care organizations that provide a wide range of healthcare services to enrolled members for a fixed, prepaid fee.

Diagnosis-Related Group

A system of classification for hospital cases used to determine payment levels for healthcare services based on the diagnosis, type of treatment, and other factors.