A Skilled Nursing Facility (SNF) has assembled the following data on daily patient census and daily cost:
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Question:
- A Skilled Nursing Facility (SNF) has assembled the following data on daily patient census and daily cost:
Census Cost
20 $3,500
25 $4,250 30 $4,800 35 $5,425 40 $6,200 45 $7,625
Calculate its average (AC) and marginal (MC) costs for volumes ranging from 25 to 45 visits. What changing AC and MC patterns do you see, and what might explain what is happening?
Census TC | MC | AC |
25 $4250 | $750/5 = $150 | $4250/25 = $170 |
30 $4800 | $550/5 = $110 | $4800/30 = $160 |
35 $5425 | $-625/5 = -125 | $5425/35 = $155 |
40 $6200 | $775/5 = $155 | $6200/40 = $155 |
45 $7625 | $1425/5 = $285 | $7625/45 = $169.45 |
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