Solutions Assignment Week-3 (2020)

1. A break-even point is reached when…

Average cost equals average revenue
Total cost equals total revenue
Marginal cost equals marginal revenue
All of the above

2. Which one of the following statements is incorrect

Marginal cost curve intersects the average fixed cost curve at its minimum point
At break-even point we achieve a normal profit
Difference between the ATC and AVC is equal to AFC
None of the above

3. One of the following is known as ‘envelope curve’

Long run average cost curve
Long run marginal cost curve
Short run average cost curve
Group of short run average cost curves

4. (A)When marginal cost is lesser than average cost curve, then it is a diseconomies of
scale
(B) When marginal revenue is equal to marginal cost we achieve either a maximum
profit or maximum loss
Both A and B are true
Both A and B are false
Only A is true
Only B is true

5. If health is a luxury good the income expansion curve will bend away from the health
axis
True

False

6. (A) We use discrete choice modeling when the dependent variable is categorical

(B) Odds ratio is a measure of the association between exposure and outcome.

Both A and B are true

Both A and B are false
Only A is true
Only B is true
 7. A hospital’s treatment cost per patient on an average is Rs. 3000, and its other
variable costs accumulate to Rs. 1400 per patient. If from ten patients the hospital
has earned a total of Rs. 66000, estimate the contribution margin percentage for the
hospital.

66.67%

97.87%

33.33%

21.21%

8. Which one does not come under the objectives of a costing system in a hospital?
To determine wage for its human resources
Utilization of its resources
Profitability analysis
Increase in patient satisfaction
None of the above

9. In Grossman's model, an increase in education causes better health because

People who choose higher levels education tend to have other characteristics which are
associated with good health.

People endowed with higher levels of education are more efficient producers of health.

People with high temporal discount rates are both more likely to smoke and less likely to go
to university.

All of the above

10. Which one of the following statement is false?

Health stock of an individual depends on his or her investment in health
Demand for preventive care will vary with socioeconomic status
Under utility maximizing framework involving health, utility will be a function of
consumption of health and budget of the consumer.
None of the above