A Consortium of Physicians Agrees to Provide Services to the Employees

question 13

Multiple Choice

A consortium of physicians agrees to provide services to the employees of a large county government. The agreement calls for monthly payments from the county to the consortium in the amount of $200,000 per month. County employees are not billed for services rendered by the consortium. All county employees are required to use the consortium under their health care program (any services rendered to county employees by other physicians are not covered under the health plan) . During the month the consortium performed services for county employees for which it would have billed $170,000. The consortium referred patients to other health care providers for services they could not perform. The consortium estimates that patients will be billed $10,000 for those services. The amount of revenue that should be recognized for the month by the consortium is

• A) $200,000.
• B) $190,000.
• C) $170,000.
• D) $160,000.

---

Definitions:

Average-Total-Cost Curve

A graphical representation that shows how the average total cost of production changes as the quantity of output is altered.

Diminishing Marginal Product

A principle stating that as additional units of a variable input are added to a fixed input, the additional output produced from each new unit decreases.

Production Function

An equation or representation showing the relationship between inputs used in production and the output of goods and services.

Total Cost

The total expense of production encompassing both constant and fluctuating costs.