1. Cost-effectiveness analysis compares the value of an innovation with its cost

Question

1. Cost-effectiveness analysis compares the value of an innovation with its cost. True or False

2. Cost cutting cannot increase profits. True or False

3. Insurance creates a principal-agent relationship that is not common outside of healthcare. True or False

4. Using marginal cost pricing you have set a price of $200. For the same service you accept a Medicare payment of $175. You would not change what you charge other patients just because Medicare changed its payment. True or False

5. A monopolistically competitive firm maintains its market share through

artificial product differentiation

relying on brand loyalty

non-price competition

all of the above

6. Which function of management is most concerned with risk minimization?

cost minimization

human resource management

complying with government regulations

entrepreneurial

7. A price discriminating firm will charge the lowest price when price elasticity of demand is

lowest

highest

equal to 1

zero

artificial product differentiation

relying on brand loyalty

non-price competition

all of the above

Explanation / Answer

1)  Cost-effectiveness analysis compares the value of an innovation with its cost is False.

2) Cost cutting cannot increase profits is False. Cost cutting can increase profit by the concept of an organized, and planned program.

3). True.

4) False.

5) d

6) d

7) b

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