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1) You manage a not-for-profit hospital in a competitive market

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1) You manage a not-for-profit hospital in a competitive market. Suppose you decide to charge less than the profit-maximizing price to your customers. a. What effect would that have on profits? b. What effect would that have on you and your career?

2) Assume the price elasticity of demand for physicians’ services is –0.2. If your marginal cost per visit is $20, what is your profitmaximizing price if you control 5 percent of the market? What is your profit-maximizing price if you control 15 percent of the market? What lessons do you draw from this?