If Hospital C does emergency care only, it has total costs of $1,000,000 for out
ID: 1110159 • Letter: I
Question
If Hospital C does emergency care only, it has total costs of $1,000,000 for output of 100 patients per day. If Hospital C does surgery only, it has total costs of $10,000,000 for 100 surgeries per day. If Hospital C does both emergency care (100 patients per day) and surgeries (100 per day), it has total costs of $10,500,000. We can say that Select one: a. Hospital C has economies of scale in emergency care only. b. Hospital C has economies of scale in surgery only c. Hospital C has economies of scope. d. None of the above.Explanation / Answer
The Correct Answer is:-
Hospital C has the economies of scope.
Reason:- Hospital C has a lesser total cost per patient which is 10500000/200=$52500 as against Hospital A and B which has the per patient fixed cost as 10000 and $100000. Thus Hospital C could attain this as it has proportionate saving gained by performing both surgery and emergency care.