If a doctor is giving treatment based on his taste and preferences, it is taste based because there are no statistics involved.

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Question (13 part one)

a) If a doctor is giving treatment based on his taste and preferences, it is taste based because there are no statistics involved.

b) If physician believes Hispanic patients not likely follow expensive treatment’s, this is statistical because

through his observations he came through tests based on statistics. This is not according to him there is

observation and statistics done.

c) Surgeon finds it is difficult for patient’s bio-compatible for kidneys, this is statistical because it is based on

the observation and statistics.

d) Nurses discriminates against patients is taste based, not statistical because it is based on the nurses

taste and preference that she likes. It cannot be measured.

 

Question (14 part one)

(a) Female gynecologists are in more demand than male gynecologists, which explains why the feminine gynecologist’s pricing is $4.81 greater than the proportion of the male one’s gynecologists. Because, whenever the curve shifts to the right, and demand for anything rises, the equilibrium price rises as well. Supply side- As the demand for female gynecologists grows, supply is limited in comparison to male gynecologists, which is why the male gynecologist’s price is $4.81 less than the female gynecologists. The longer wait times show that the consumer is ready to pay more for a female gynecologist than a male gynecologist due to the lower availability of female gynecologists. When supply is limited and demand is strong, the price rises accordingly, as is the situation here.

 

(b)Demand side – Yes, the longer the waiting time and higher rates for female gynecologists demonstrate that the market is competitive, since female gynecologists command a $4.81 greater price from patients than male gynecologists. Supply side – Due to the scarcity of female gynecologists, their prices are higher and their waiting times are longer, making female gynecologists extremely competitive in the market.

(c)Demand side – Because the demand for female gynecologists is higher, price discrimination favors them, causing them to be price level setters in the market. Discrimination driven by supply for female and male gynecologists is limited, as is pricing discrimination for male gynecologists.

 

 

Question (15 part one)

A restrictive license promotes public interest. It is done due to concerns that lay persons lack the ability to evaluate sufficiently the quality of medical services due to their dearth of expertise & their susceptibility in sickness and as reliable info on quality is usually not available.

Also, incompetent & unethical medical interventions present a significant risk of danger to health and wellbeing of the patient & considerable negative externalities to the 3rd party. In terms of economic implications, the market for health-care services is featured by market failure that imparts the logic for restrictive licenses. But restrictive licenses create some undesirable results.

Health-care professionals & patients are restricted in their choices about treatments and also licensure increases the costs in healthcare.

Part two Question 14

a)

Profit = (p1-c1)q1 + (p2-c2)q2

p1 and p2 are constant. c1 = q1/2; c2 = q2/2

Profit X= (p1-q1/2)q1 + (p2-q2/2)q2 = p1q1+p2q2-q1^2/2-q2^2/2

the derivative of profit will be zero for profit maximizing

p2-q2=0 so p2=q2 (supply function)

Keeping q2 constant and differentiate profit wrt q1

dX/dq2 = 0 + p1 – q1

the derivative of profit will be zero for profit maximizing.

p1-q1=0 so p1=q1 (supply function)

b)

Let q1 be constant and differentiate profit equation wrt q2

Profit X= (p1-q1/2)q1 + (p2-q2/2q1)q2 = p1q1+p2q2-q1^2/2-q2^2/2q1

dX/dq2 = 0 + p2 – q2/q1

let dX/dq2 = 0 so q2 = p2q1

Now substitute this in profit equation

Profit X= (p1-q1/2)q1 + (p2-q2/2q1)q2 = p1q1+p2^2q1-q1^2/2-p2^2q1^2/2q1 = p1q1 + p2^2q1/2-q1^2/2

dX/dq1 = p1+p2^2/2-q1=0(to maximize profits)

q1= p1+p2^2/2

q2= p1p2+p2^3/2

 

c) As per the supply equations the hospital should be seeing more patient from learning by doing.

Question (14 part two)

1. The share of each firm is 0.1=1/10 as there are 10 firms in the industry, so the HH index is calculated this way

 

 

 

1. if one firm has 90% of the other nine firm have equal share of the remainder, so the share of those nine firms will be

 

 

 

 

c)The larges count for HH Index is 1.though this can a happen if only we have one firm in the entire market and holds all the shares in the market.

d)after the entry of one firm, the share of the 11-firm become 1/11.

The entry of another firm would increase the competition into the market. Thus, the HH index can be worked out as:

 

 

 

 

 

 

Question (16 part two)

(A) If B Buys Machine, then;(1) If A buy Machine, then payoff for A will be -200 (that is 800 from revenue and 1000 as cost) (2) If A doesn’t Buy Machine, then payoff for A will be -300 (loss from B buying machine and patient moving towards B) Since -200>-300 therefore A will decide to Buy Machine.

(B) if B decide not to Buy Machine the payoff for A from,

(1) Payoff for A when buy Machine will be 800 (1800 as revenue and 1000 cost of machine)

(2) Payoff for A when decide not to Buy Machine will be 0 (zero).

Since 800>0 therefore A will decide to Buy Machine

(2) (Buy , Don’t Buy ) = 800

(3) (Don’t Buy , Don’t Buy) = 0

(4) (Don’t Buy, Buy) =-300

(II) Payoff for B

(1) (Buy, Buy) = -200

(2) (Buy, Don’t Buy) = -300

(3) (Don’t Buy, Don’t Buy) = 0

(4) (Don’t Buy, Buy) =800

 

 

c)

Hospital B
Hospital A Buy Don’t Buy
buy (-200, -200) (800, -300)
Don’t Buy (-300,800) (0,0)

 

(D) In this Game for Profit Maximization i.e. Finding Nash Equilibrium

(1) For Hospital A payoff from Buy is always greater than Don’t Buy , i.e Buy is dominant strategy for

Hospital A and Don’t Buy is Dominated strategy, therefore Hospital A will always choose Buy as it’s

strategy.

(2) For Hospital B payoff from Buy is always greater than Don’t Buy, therefore Buy is Dominant Strategy and Don’t Buy is Dominated strategy and Hospital B always Choose Buy. Therefore, using iterated elimination of dominated strategy under which Don’t Buy gets eliminated (aspayoff from Don’t Buy are strictly less than buy) and Since Both Hospital A & Hospital B have Buy has their Dominant Strategy, therefore Nash Equilibrium of Above Game Will (Buy, Buy). Hence Both Hospital A & Hospital B will Buy Machine, which isn’t Social Optimum level that is one Buying Machine

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