Supply and demand of a monopoly


Question Description:

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Supply and demand of a monopoly 1 answer below » 2. Suppose
your community has one dominant insurer that negotiates with a bunch of
hospitals in your market (where “a bunch” is 10) The insurer
is willing to trade-off in-network status for lower prices, thereby
giving hospitals an incentive to lower price to get more customers. Suppose the resulting demand for orthopedic
surgeries is given by Price 50K 45K 40K 35K 30K 25K 20K Quantity 0 10 20 30 40 50 60 Further
suppose that the cost structure facing the hospitals View complete question » 2. Suppose
your community has one dominant insurer that negotiates with a bunch of
hospitals in your market (where “a bunch” is 10) The insurer
is willing to trade-off in-network status for lower prices, thereby
giving hospitals an incentive to lower price to get more customers. Suppose the resulting demand for orthopedic
surgeries is given by Price 50K 45K 40K 35K 30K 25K 20K Quantity 0 10 20 30 40 50 60 Further
suppose that the cost structure facing the hospitals follows the schedule below Total Cost 200K 350K 550K 800K 1100K 1450K 1850K Quantity 0 10 20 30 40 50 60 (hint
#1: throughout this problem, whenever you calculate the marginal cost or revenue
between two quantities, assume that the marginal value calculated applies at
the higher of the two quantities and that the marginal value for one unit is
the difference in total revenue or cost divided by 10, the change in quantity
shown in the tables above). (hint
#2: the appropriate market diagram will help you determine how to answer the
questions below) a.
Find the supply
function for the hospitals (hint
#3: you have been given the total cost for all hospitals which we are assuming are identical, so the data above will get you
the market supply curve) (hint
#4: the marginal cost shows the minimum a supplier must be paid to supply a
given quantity of the good) b.
Given the
existing market structure, find the equilibrium price and quantity of
orthopedic surgeries. c.
Suppose the
hospitals merge into one umbrella organization to improve their bargaining
position. What would the new price and
equilibrium be? d.
Under which
scenario, (b) or (c), would society be better off? Explain your answer. View less » Oct 02 2013 11:04 PM

Answer

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