©SIRJOEL EXAM SOLUTIONS
10/3/2024 9:54 PM
Chapter 7 Healthcare Finance Questions
With Correct Answers
A. Using a hospital to illustrate your answer, explain the difference between a price setter and a
price taker. - answer✔
• The hospital and healthcare environment are very competitive and when it comes to both price
setting and price taking there are many influences in both. - answer✔
• Price takers - answer✔Are those peoples or individuals that are constrained to take the prices
that are set by the healthcare market in general. They take price as it is given to them and used as
managerial efforts on their cost structure and utilization so that the services they offer are
profitable.
• Price setters - answer✔These are providers that show dominance in the market. They do this by
showing forth their power in setting prices. There are limits they can set them but they can again
set their limits in both undifferentiated and differentiated environments.
b. Can most providers be classified strictly as either a price setter or a price taker? - answer✔In
some markets there are both price setters and price takers. One geographic area might use a price
setter to set prices and another might be a price taker in a different geographic area to take the
, ©SIRJOEL EXAM SOLUTIONS
10/3/2024 9:54 PM
price associated with that environment. This could be so even though they are the same company
or organization but the environment around them is different. I would say that certain entities can
be either or.
7.2. Explain the essential differences between full cost and marginal cost pricing strategies. -
answer✔Full costs are associated with organizations making them viable in the long run. They
must set prices that recover all costs with operating the business.
Marginal costs are the cost of providing one additional unit of output even it is either a product
or service.
The main difference between them both is that fixed costs and overhead costs have already been
paid and the reimbursements are already covered. These costs are associated with full costs so
when the hospital offers 3000 patient days it is on the 3001st day when the marginal costs will
kick, like variable costs. In the long run marginal costs are beneficial to helping make revenue to
bare the full costs.
7.3. What would happen financially to a health services organization over time if its prices were
set at. - answer✔Check next 2 slides
a. Full costs - answer✔The organization would be doing okay because they would make back all
the costs because of variable and fixed costs. Thus this would make a profit.
10/3/2024 9:54 PM
Chapter 7 Healthcare Finance Questions
With Correct Answers
A. Using a hospital to illustrate your answer, explain the difference between a price setter and a
price taker. - answer✔
• The hospital and healthcare environment are very competitive and when it comes to both price
setting and price taking there are many influences in both. - answer✔
• Price takers - answer✔Are those peoples or individuals that are constrained to take the prices
that are set by the healthcare market in general. They take price as it is given to them and used as
managerial efforts on their cost structure and utilization so that the services they offer are
profitable.
• Price setters - answer✔These are providers that show dominance in the market. They do this by
showing forth their power in setting prices. There are limits they can set them but they can again
set their limits in both undifferentiated and differentiated environments.
b. Can most providers be classified strictly as either a price setter or a price taker? - answer✔In
some markets there are both price setters and price takers. One geographic area might use a price
setter to set prices and another might be a price taker in a different geographic area to take the
, ©SIRJOEL EXAM SOLUTIONS
10/3/2024 9:54 PM
price associated with that environment. This could be so even though they are the same company
or organization but the environment around them is different. I would say that certain entities can
be either or.
7.2. Explain the essential differences between full cost and marginal cost pricing strategies. -
answer✔Full costs are associated with organizations making them viable in the long run. They
must set prices that recover all costs with operating the business.
Marginal costs are the cost of providing one additional unit of output even it is either a product
or service.
The main difference between them both is that fixed costs and overhead costs have already been
paid and the reimbursements are already covered. These costs are associated with full costs so
when the hospital offers 3000 patient days it is on the 3001st day when the marginal costs will
kick, like variable costs. In the long run marginal costs are beneficial to helping make revenue to
bare the full costs.
7.3. What would happen financially to a health services organization over time if its prices were
set at. - answer✔Check next 2 slides
a. Full costs - answer✔The organization would be doing okay because they would make back all
the costs because of variable and fixed costs. Thus this would make a profit.
