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 ____________.
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
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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 ____________.
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