Substitution of inputs

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Substitution of inputs

One chief concern among healthcare administrators and executives is how to minimize costs by managing inputs to the production of patient services.

Appraise: “When the prices of inputs change, healthcare providers may substitute away from one input toward another.”

Your appraisal must begin by asserting whether the statement is true or false. Use appropriate graphs to enhance your appraisals, making sure to clearly label everything.

In your appraisal, compare two healthcare providers, one that has a great deal of flexibility in substituting inputs for one another, and another that lacks that flexibility.

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