Suppose that you are interested in comparing the costs of producing inpatient care services at XYZ Hospital with those at ABC Hospital. Further suppose that the two hospitals annually admit about 24,000 (XYZ) and 32,000 (ABC) patients at average short-run total costs per admission of roughly $11,000 (ABC) and $12,000 (XYZ). Using short run cost theory, identify four factors that might explain why ABC Hospital has higher average short run costs of production than XYZ Hospital.

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