Volume 7, Number 2—April 2001
THEME ISSUE
4th Decennial International Conference on Nosocomial and Healthcare-Associated Infections
State of the Art
Applying Economic Principles to Health Care
R. Douglas Scott*
, Steven L. Solomon*, and John E. McGowan†
, Steven L. Solomon*, and John E. McGowan†
Figure 2
Figure 2. Standard curve of production function, demonstrating the relation between one input and one output.
¹A complicating factor omitted from the discussion is time. In a longer view of time, all fixed inputs are considered variable and can be redeployed to some other productive process. Therefore, fixed costs must be covered in the long run. Since fixed costs are 'sunk" costs (spent before production even begins), it makes sense to keep operating for short time periods (as opposed to shutting down all production) if variable costs are covered.
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