The Figure Given Below Represents Demand for and Supply of Hospital

question 48

Multiple Choice

The figure given below represents demand for and supply of hospital beds in Anytown, U.S.A. , as shown by curves D and S₁ in the following figure.If the hospital receives permission to expand, its new supply curve will be S₂.Price level P₁ is the fixed prospective payment reimbursement rate paid by Medicare to the hospital, regardless of actual cost. Figure 18.3 According to Figure 18.3, the surplus of beds caused by the fixed reimbursement rate, before the hospital expansion, is the difference between _____ and _____.

• A)Q₂;Q₁
• B)Q₄;Q₁
• C)Q₄;Q₂
• D)Q₃;Q₁
• E)Q₃;Q₂

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Definitions:

Annual Perpetuity

A type of financial annuity that makes consistent annual payments to the holder indefinitely.

Interest Rate

The percentage paid by a borrower to a lender for the privilege of borrowing money, often annually, or the yield earned on investment funds.

Cash Flow Streams

Multiple inflows and outflows of cash, associated with investments or business operations, over a period.

Future Value

The value of an investment at a specific future date, including interest or dividends.