PUBH 3130 Study Guide - Midterm Guide: Isocost, Isoquant, Diminishing Returns
Document Summary
Healthcare output: simple as a physical exam or treatment. As inputs to production are used in higher quantities, their effect on output decreases. Marginal product: change in output that results from adding one unit of input. Diminishing returns in production occur for a few reasons: Increases in factor of production may not bring efficiency. Resources used in producing one type of good or service may not be as efficient when transferred to the production of another good or service. When firms grow in size, they experience a decrease in long run average total cost. Economies of scale: the relationship between scale of production and declining average total cost. Economies of scope occur when two or more goods are produced jointly rather than separately and thus total costs are reduced. Once an organization decides what output to produce, it needs to decide which inputs to use to achieve its desired production goal.
