1) A clinic’s average and marginal cost per case is $400

1) A clinic’s average and marginal cost per case is $400. It charges $600 per case and serves 1,000 customers. Its marketing team predicts that it will expand its sales to 1,250 if it signs a contract for a price of $550 with a local health maintenance organization. How do profits change if it signs the contract? What is the firm’s marginal revenue? Why is its marginal revenue different from the marginal revenue in the previous problem?

2. Why would a for-profit organization that incurs losses choose to operate?