General Hospital Has Variable Costs of 90% of Total Revenues

question 48

Multiple Choice

General Hospital has variable costs of 90% of total revenues and total fixed costs of $50 million per year.There are 50,000 patient-days estimated for next year.What is the average daily revenue per patient necessary to breakeven?

• A)$250
• B)$1,000
• C)$4,000
• D)$10,000

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Definitions:

Marginal Productivity

Marginal productivity refers to the additional output that is produced by adding one more unit of a factor of production, holding all other factors constant.

Labor

Labor refers to the human effort, both physical and mental, used in the production of goods and services, forming a crucial component of the economic production process.

Isoquant

A curve illustrating all possible combinations of inputs that yield the same quantity of output, demonstrating how firms can substitute between different factors of production to maintain output levels.

MRTS

The Marginal Rate of Technical Substitution, depicting the rate at which one input can be substituted for another in the production process while keeping output constant.