The focus of this assignment is on the production side of the healthcare market. Pricing and demand will be taken as exogenously determined. Your goal in each part of this assignment is to efficiently use the inputs. This starts with what might be termed the short short-run, where all inputs are fixed, but they can be reallocated to different purposes. It then moves to the short-run, where some inputs (e.g., labor) is variable, but other inputs (e.g., capital) are fixed. It concludes with the long-run, where all inputs are variable.

Part A: The 'short short-run'

The Talisman clinic consists of four workers (Aaron, Abbey, Ace, and Ada) who share some or all of the following tasks: performing a medical procedure, follow-ups, and tests. The data below gives their time per task, in minutes. Assume that each can work up to six hours per day (e.g., 360 minutes) at these tasks, but no more. 'N/A' means that the individual isn't qualified to perform the medical procedure.

Individual Medical procedures Follow-ups Tests

Aaron 18 9 6

Abbey 14 9 5

Ace N/A 22 10

Ada N/A 16 6

Each patient seen will ultimately need one medical procedure, two routine follow-ups, and three routine tests.

Initial scenario:

For each patient that Aaron sees, he does one follow-up and one test.

Ace is Aaron's assistant; for each patient that Aaron sees, Ace does one follow-up and two tests.

For each patient that Abbey sees, she does one follow-up and one test.

Ada is Abbey's assistant; for each patient that Abbey sees, Ada does one follow-up and two tests.

1. Calculate the number of 'patient-equivalents' that can be handled during a workday. If you have 4 medical procedures, 8 follow-ups, and 12 tests, that counts as four patient-equivalents, so your answer would be 4. In solving for this, you must use whole numbers; no partial patients are allowed. Some staff may be partially idle. You are reporting the aggregate for the four workers. Your score on this question will be based on how close you are to the correct answer without going over.

Reallocating the labor:

2. If each worker is assigned to tasks so that total group output is maximized, how many 'patient equivalents' can be seen per day? Use whole numbers when assigning tasks. Your score on this question will be based on how close you are to the maximum possible number of patients. Setting this up in Excel to keep track of total patients and minutes used is highly recommended. You will want to use the concept of comparative advantage.