D. Briefly interpret the relationship between AR and MR based on your solution to thetable. 8. Hospital Profit MaximizationA. Below are two figures representing profit-maximization in two different hospitals.Please label the marginal cost, marginal revenue, average cost and averagerevenue for each of the two hospitals.Hospital (a)Hospital (b)Output (Q)Output(Q)B. According to the model shown in the graphs, can you identify which of the hospitalsis a hospital in a competitive market (price-taker), and which hospital appears to bemonopolistic? Please explain.C. Fill in the average revenue and marginal revenue in the table.Output (Q) Total Revenue (TR) Average Revenue (AR) Marginal Revenue (MR)4$32056$4207$455Costs/RevenaCosts Revens

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8. Hospital Profit Maximization A. Below are two figures representing profit-maximization in two different hospitals. Please label the marginal cost, marginal revenue, average cost and average revenue for each of the two hospitals. Hospital (a) Hospital (b) Output (0) Output (0) B. According to the model shown in the graphs, can you identify which of the hospitals is a hospital in a competitive market (price-taker), and which hospital appears to be monopolistic? Please explain. C. Fill in the average revenue and marginal revenue in the table. Output (Q) Total Revenue (TR) Average Revenue (AR) Marginal Revenue (MR) 4 $320 5 $375 6 $420 7 $455 Cont Reven Cont Reven

8. Hospital Profit Maximization A. Below are two figures representing profit-maximization in two different hospitals. Please label the marginal cost, marginal revenue, average cost and average revenue for each of the two hospitals. Hospital (a) Hospital (b) Output (0) Output (0) B. According to the model shown in the graphs, can you identify which of the hospitals is a hospital in a competitive market (price-taker), and which hospital appears to be monopolistic? Please explain. C. Fill in the average revenue and marginal revenue in the table. Output (Q) Total Revenue (TR) Average Revenue (AR) Marginal Revenue (MR) 4 $320 5 $375 6 $420 7 $455 Cont Reven Cont Reven

EBK HEALTH ECONOMICS AND POLICY

7th Edition

ISBN:9781337668279

Author:Henderson

Publisher:Henderson

Chapter10: The Hospital Services Market

Section: Chapter Questions

Problem 2QAP

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Some economists have suggested that the best way to control medical costs is to remove the profit incentive for health care providers, particularly hospitals. This would involve making all hospitals not-for-profit institutions. Use the utility maximization model to explain the likely impact such a policy would have on the cost of producing hospital services. What would happen if instead a policy was instituted that reduced barriers to entry in the hospital sector and therefore made the market more competitive?
Use a graph to illustrate how the following changes would affect the demand curve for inpatient services at a hospital in a large city. a. Average real income in the community increases. b. A number of physicians in the area join together and open up a discount-price walk-in clinic; the cross-price elasticity of demand between physician services and inpatient hospital services is –0.50.
Andrea's Day Spa began to offer a relaxing aromatherapy treatment. The firm asks you how much to charge to maximize profits. The demand curve for the treatments is given by the first two columns in the following table; its total costs are given in the third column. Answer the following question accordingly. Price QuantityTC $25.00 $100 $24.00 10 $250 $23.00 20 $420 $22.00 30 $600 $21.00 40 $780 $20.00 50 $970 $19.00 60 $1,170 Total fixed costs in the above table is: Select one: a. $130 b. $10 c. $100 d. Zero
Andrea's Day Spa began to offer a relaxing aromatherapy treatment. The firm asks you how much to charge to maximize profits. The demand curve for the treatments is given by the first two columns in the following table; its total costs are given in the third column. Answer the following question accordingly. Price QuantityTC $25.00 $100 $24.00 10 $250 $23.00 20 $420 $22.00 30 $600 $21.00 40 $780 $20.00 50 $970 $19.00 60 $1,170 Total revenue of producing 30 units of output from the above table is: Select one: a. $180 b. $435 c. $600 d. $660
Your task is to show what the profit of this firm might look like using a key economics diagram. To make graphing easier, we will consider the price of the Ozempic drug for the middle-income country Bangladesh, which is $38 (assumed the profit-maximising price). For this task, you will be required to illustrate and explain to a typical first-year undergrad student who has no economics background the profit the firm makes at $38 per month, and what has happened to profit (producer surplus), markup, consumer surplus and the output if the price was reduced from $38 to $10 per month.
Andrea’s Day Spa began to offer a relaxing aromatherapy treatment. The firm asks you how much to charge to maximize profits. The first two columns in the table below provide the price and quantity for the demand curve for treatments. The fifth column shows its total costs. Complete the table. What is the profit-maximizing level of output for the treatments and how much will the firm earn in profits? Price Quantity Total Revenue Marginal Revenue Total Cost Marginal Cost $25 0 $0 N/A $130 N/A $24 10 $275 $23 20 $435 $22.50 30 $610 $22 40 $800 $21.60 50 $1005 $21.20 60 $1225
Suppose you work for Philippine Competition Commission and you find out that in province A, the only two available hospitals are planning to merge, which would result to a monopoly. If you do not allow for merging, hospital 2 will leave the market. Given the following cost functions and the information provided, would you allow for the merging of the two hospitals? Why or why not? Explain intuitively and mathematically. Hospital 1's cost function = 30 + q Hospital 2's cost function = 40 + 92 Joint cost function = 50+q+q2
A physical therapy clinic faces a demand equation of Q 200-1.5P, where Q is sessions per month and P is the price per session. The clinic is currently charges $80. What is its sales volume and revenue at this price? -
Describe the different operating characteristics of the for- profit and the not-for profit hospitals.
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Is there a significant difference in quality and access between for-profit and not-for-profit hospitals? Give an example of each type of hospital and briefly explain the differences (community-owned, physician-owned facilities, teaching hospitals)