Posted: March 26th, 2018

Calculate the opportunity costs of increasing the number of coronary bypass operations from 1000 to 1250 in terms of the number of prenatal visits lost. (5%)

1. You are the CEO for a reginal hospital and have a stock of capital equipment and a fixed budget for labor set by the State’s legislature. Assume that this hospital produces only two services: coronary bypass operations and prenatal care for expectant mothers. The following table describe the production probabilities for the hospital in the current fiscal year.(21%)

1. Calculate the opportunity costs of increasing the number of coronary bypass operations from 250 to 500 in terms of the number of prenatal visits lost. (5%)
2. Calculate the opportunity costs of increasing the number of coronary bypass operations from 1000 to 1250 in terms of the number of prenatal visits lost. (5%)
3. Does this PPF exhibit the law of increasing opportunity costs? (5%)
4. Suppose the hospital will receive some new surgical equipment that made it much easier to perform bypass operations (but has no impact on prenatal visits). What would this change in technology do to the PPF? (Select one figure from the study material file and describe). (6%)