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

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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Answer To calculate the average cost AC and marginal cost MC for the given data I will use the following formulas Average Cost AC Total Cost TC Census ... View full answer

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