Montyyy95 wrote:
Under normal circumstances, the more competition in an industry, the lower the prices that consumers pay for that industry's products. But surgery patients in hospitals in the most competitive market are likely to pay more per hospital stay than are surgery patients in less competitive hospital markets.
Which of the following, if true, LEAST contributes to an explanation of the apparent paradox described above?
A. The cost of living in the most competitive hospital markets is considerably higher than the national average
B. Hospitals tend to respond to competition by buying expensive diagnostic equipment, the cost of which is passed on to patients.
C. If given a choice, surgery patients avoid those hospitals whose cost containment strategies include such practices as refurbishing patients' rooms less frequently.
D. Now that many simple surgeries can be performed safely in any qualified physician's office, most surgeries performed in hospitals are both serious and expensive.
E. In the most competitive markets, physicians tend to keep postoperative patients in the hospital longer than do physicians in less competitive markets.
Normally, more competition leads to less cost for customers.
Surgery patients in hospitals in the most competitive market are likely to pay more per hospital stay than those in less competitive hospital markets.
Hoozan - They pay more per hospital stay (one hospital stay can be of any number of days). One stay means one visit for say one surgery. It could involve staying over for multiple days. So the argument tells us that the total cost of one stay is higher in more competitive markets than the total cost of one stay in less competitive markets.
What cannot explain this paradox?
A. The cost of living in the most competitive hospital markets is considerably higher than the national average
Since cost of living in areas of competitive hospital markets, cost of stay in hospitals will also be higher. Explains the paradox.
B. Hospitals tend to respond to competition by buying expensive diagnostic equipment, the cost of which is passed on to patients.
Hospitals in competitive markets have higher costs and they pass them on to patients. So patients pay higher. Explains the paradox.
C. If given a choice, surgery patients avoid those hospitals whose cost containment strategies include such practices as refurbishing patients' rooms less frequently.
If patients prefer frequent refurbishing, hospitals in competitive markets will frequently refurbish and hence pass on the cost to patients. This explains the paradox too.
D. Now that many simple surgeries can be performed safely in any qualified physician's office, most surgeries performed in hospitals are both serious and expensive.
This doesn't explain the paradox. This would be true for both competitive and less competitive markets. Simple procedures will happen in physician's office and hospital surgeries would be the serious and more expensive cases. Then why do people pay more in competitive markets?
E. In the most competitive markets, physicians tend to keep postoperative patients in the hospital longer than do physicians in less competitive markets.
In competitive markets, patients are kept in the hospital longer so their stay becomes more expensive. Explain the paradox.
Answer (D)