ECO 605 Assignment 2.1: Maximizing Productivity
In this assignment, you are presented with a chart representing the number of nurses, number of patient visits associated the number of nurses available, and the MPL of each additional nurse hired. You will calculate missing information and use the data to assess the clinic’s inputs, outputs, and point of diminishing return. You will use this assessment to provide recommendations to the clinic in terms of how many nurses to hire to ensure maximum productivity.
Many people are not aware of the financial aspects involved in running a business. One important aspect is determining how much it costs to produce certain products, which can be difficult without knowing what your exact output will look like or if there’s any chance you might increase production levels over time and reduce losses from decreased sales due to too low demand for their product line-up (Fathi et al., 2020). The key factor here remains fixed expenses versus variable ones depending on whether these ongoing payments change based on allotted resources being used up gradually instead of when extra spending needs arise unexpectedly because things went wrong–such situations often occur during start-ups where everything often becomes challenging. Fixed costs, total costs, and total variable costs are important parts of running a business (Lin & Chen, 2020). This assignment involves calculating different costs for a clinic and determining factors that are likely to decrease or increase the costs. There is going to be the calculation of the clinic’s marginal costs (MC). To better understand the behavior of the cost of the clinics, different average costs and marginal costs have been translated into graphical form.
Definition of Terms
Total fixed costs refer to the sum of all the consistent and non-variable expenses that an organization or a company ought to pay. Fixed costs are those that still exist even when production is at zero (De Loecker et al., 2020). These can be seen as overhead, and many of them have been known to Total Fixed cost is the total amount a business must pay regardless of their produce- this does not change based on how much product that a company makes. The total variable cost for a company’s production is equivalent to the amount it takes to produce one unit (Sabogal-De La Pava et al., 2020). This number can be determined by simply multiplying how much each individual product costs and then adding them all together, making sure not to include any fixed or indirect expenses such as rent space where these items/products are made. The total cost is the sum of all expenses that a company incurs to produce one unit. These can include fixed parts and variable ones such as labor or rent on space where products are being made but do not include taxes since these vary depending upon what product is being made (Yang, 2020).
Formulas for AFC, AVC, ATC, and MC
Average Fixed Cost (AFC) = (Ran et al., 2020)
Average Variable Cost (AVC) =
Average Total Cost (ATC) =
Marginal Cost (MC) =
| Patient Visits | Total Variable Costs | Total Costs
(TFC+TVC) |
Total Fixed Costs | Average Fixed Cost | Average Variable Cost | Average Total Cost |