Fill in the blanks and please show the calculations: a) Suppose that the average annual malpractice cost is $40,000 for reckless doctors and $4,000 for careful doctors. If half of an insurance company's insured doctors are reckless, the company will earn zero economic profit if the price of insurance is ____________. b) If careful doctors are not willing to pay more than $7,000 for insurance, the price required for zero economic profit is ____________.

Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter2: Some Tools Of The Economist
Section: Chapter Questions
Problem 14CQ
icon
Related questions
Question

Fill in the blanks and please show the calculations:

a) Suppose that the average annual malpractice cost is $40,000 for reckless doctors and $4,000 for careful doctors. If half of an insurance company's insured doctors are reckless, the company will earn zero economic profit if the price of insurance is ____________.

b) If careful doctors are not willing to pay more than $7,000 for insurance, the price required for zero economic profit is ____________.

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Economic Policy
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Macroeconomics: Private and Public Choice (MindTa…
Macroeconomics: Private and Public Choice (MindTa…
Economics
ISBN:
9781305506756
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
Economics: Private and Public Choice (MindTap Cou…
Economics: Private and Public Choice (MindTap Cou…
Economics
ISBN:
9781305506725
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
Microeconomics: Private and Public Choice (MindTa…
Microeconomics: Private and Public Choice (MindTa…
Economics
ISBN:
9781305506893
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning