Answered: $10r Total cost, System I: y = 0.90x +…

$10r Total cost, System I: y = 0.90x + 1.0 $8 $6 Total cost, System II: y = 0.10x + 5.0 $4 $2 $0 5 10 Maps Dispensed per year (thousands) Cost (thousands)

EBK HEALTH ECONOMICS AND POLICY

7th Edition

ISBN:9781337668279

Author:Henderson

Publisher:Henderson

Chapter4: Economic Evaluation In Health Care

Section: Chapter Questions

Problem 7QAP

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Question

Two automatic systems for dispensing maps are being compared by the state highway department. The accompanying breakeven chart of the comparison of these systems (System I vs. System II) shows total yearly costs for the number of maps dispensed per year for both alternatives. Answer the following questions. (a) What is the fixed cost for System I? (b) What is the fixed cost for System II? (c) What is the variable cost per map dispensed for System I? (d) What is the variable cost per map dispensed for System II? (e) What is the breakeven point in terms of maps dispensed at which the two systems have equal annual costs? (f) For what range of annual number of maps dispensed is System I recommended? (g) For what range of annual number of maps dispensed is System II recommended? (h) At 3000 maps per year, what are the marginal and average map costs for each system?

$10r
Total cost, System I: y = 0.90x + 1.0
$8
$6
Total cost, System II:
y = 0.10x + 5.0
$4
$2
$0
5
10
Maps Dispensed per year (thousands)
Cost (thousands)

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