Health care costs are expected to rise more than 10 percent into 2011, according to a survey of insurers by Aon Consulting Worldwide. If the increase in costs is expected to solely come from increased costs to buy MRI and X-ray machines, then for the health care industry:
A) Fixed costs are increasing.
B) Long run average total cost is decreasing.
C) Productivity is increasing.
D) Variable costs are increasing.

Question

Quizplus · Accepted Answer

Fixed costs refer to costs that do not change with the level of production or sales, such as the cost of purchasing equipment. If the increase in health care costs is solely due to increased costs to buy MRI and X-ray machines, then this would result in an increase in fixed costs for the industry.

Health Care Costs Are Expected to Rise More Than 10