Which Social Insurance Program Pays for a Substantial Portion of the Hospital

question 45

Multiple Choice

Which social insurance program pays for a substantial portion of the hospital, doctor, and drug costs of retirees and the disabled?

• A) Medicare
• B) AFDC
• C) Social Security
• D) Medicaid
• E) None of the above

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Definitions:

Law of Diminishing Returns

Law of Diminishing Returns states that in a production process, adding an additional factor of production, while holding all others constant, will at some point yield lower per-unit returns.

Sunk Costs

Costs that have already been incurred and cannot be recovered or refunded, and should not influence current or future decisions.

Variable Costs

Costs that change in proportion to the level of production or service activity.

Fixed Costs

Expenses that remain constant regardless of the amount of production, like lease payments or wages.