Podcast
Questions and Answers
Which of the following best describes opportunity cost?
Which of the following best describes opportunity cost?
- The cost of resources consumed by a program or treatment
- The direct costs associated with a healthcare intervention
- The total cost of production in a given time frame
- The lost value of alternatives when a resource is used for a specific purpose (correct)
What type of costs remain constant regardless of the level of output in the short run?
What type of costs remain constant regardless of the level of output in the short run?
- Fixed costs (correct)
- Variable costs
- Incremental costs
- Direct costs
What type of costs are incurred as a result of changes in production capacity due to illness?
What type of costs are incurred as a result of changes in production capacity due to illness?
- Direct costs
- Incremental costs
- Indirect costs (correct)
- Fixed costs
Which of the following is considered a direct non-medical cost?
Which of the following is considered a direct non-medical cost?
What distinguishes incremental costs from other types of costs?
What distinguishes incremental costs from other types of costs?
Which of the following is NOT a direct medical cost?
Which of the following is NOT a direct medical cost?
What is the relationship between fixed costs and output in the short run?
What is the relationship between fixed costs and output in the short run?
Which of the following would be classified as a variable cost in a healthcare setting?
Which of the following would be classified as a variable cost in a healthcare setting?
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Study Notes
Economic Outcomes Assessment
- Economic outcomes assessment evaluates the costs associated with programs or treatments.
Cost Definitions
- Fixed Costs:
- Do not vary with output in the short term (around one year).
- Include expenditures such as rent and certain salaries.
- Variable Costs:
- Change with the level of output.
- Examples include supplies and service fees.
- Incremental Costs:
- Additional expenses incurred to achieve more benefits from alternative strategies.
- Opportunity Cost:
- Represents forgone benefits from using resources in a specific way instead of its best alternative.
- Central concept in economics illustrating lost opportunities, crucial for resource allocation.
Types of Costs Related to Health Care Products and Services
-
Direct Costs:
- Resources used in preventing or treating disease.
- Direct Medical Costs:
- Associated with immediate medical care expenses like hospital stays, medications, and tests.
- Direct Non-Medical Costs:
- Costs outside of medical care, such as transportation and family care due to illness.
-
Indirect Costs:
- Costs linked to changes in productivity due to disease or health interventions.
- Morbidity Costs:
- Result from lost productivity when individuals miss work due to illness.
- Mortality Costs:
- Financial impact arising from premature death leading to loss of potential labor.
-
Intangible Costs:
- Represent non-financial effects of illness and medical care, difficult to quantify.
- Include pain and suffering, reflecting qualitative impacts that cannot be assigned a monetary value.
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