Hospitals typically include all their sunk costs when deciding how much it costs them to provide services because
A) each patient benefits from the hospital's being adequately equipped.
B) hospital administrators have no incentive to be efficient.
C) no hospital could continue operating if it wasn't able to cover its sunk costs.
D) the payments they receive are largely based on what they say are their costs.
E) they are non-profit institutions and hence are in general poorly managed.
D
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Consider the demand curves for soft drinks shown in the figure above. Suppose the economy is at point a. An increase in the price of a soda results in a movement to a point such as
A) none of the points illustrated. B) b. C) c. D) d.
The expected real interest rate approximately equals
A) the nominal interest rate minus the tax rate. B) the nominal interest rate minus the expected rate of inflation. C) the nominal interest rate plus the expected rate of inflation. D) the yield to maturity on a coupon bond held to maturity.
Two bonds of equal risk are for sale on the secondary bond market. The two bonds have the same face value, and both mature in 10 years. Bond A pays $10 per year and bond B pay $15 per year. Which bond will sell for a higher price?
A) Bond A B) Bond B C) They will sell for the same price. D) The relative prices will depend on the expected interest rate over the next 10 years.
In a price leadership oligopoly model,
a. a cartel of leading firms determines price and industry output b. the leading firm colludes on price with each of the other firms and in this way has primary decision-making powers over price c. one firm is the price leader and all other firms in the industry follow d. the firm that leads abandons the profit-maximizing goal e. the leader firm produces where MR = MC, and all others produce where P = ATC