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Unformatted text preview: HPAM8600: Health Economics UGA College of Public Health Professor Angela Fertig Spring 2010 Homework 3 Due Wednesday, February 3, 2010 1. Consider the following table of long-run total cost for three different hospitals: Quantity 1 2 3 4 5 6 7 Hospital A 60 70 80 90 100 110 120 Hospital B 11 24 39 56 75 96 119 Hospital C 21 34 49 66 85 106 129 Does each of these hospitals experience economies of scale or diseconomies of scale? Draw graphs and explain. 2. Specialty Docs is a small medical practice that is considering entering a market dominated by Big Box Hospital. Each firms profit depends on whether Spe- cialty Docs enters and whether Big Box Hospital begins to offer more of the specialty services that Specialty Docs are good at. The strategic form of this game is: Big Box Hospital Offer specialty Dont offer Specialty Enter (-$1 million, $1 million) ($2 million, $3 million) Docs Dont Enter ($0, $2 million) ($0, $7 million) Big Box Hospital threatens Specialty Docs by saying If you enter, were going...
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This note was uploaded on 01/18/2012 for the course HPAM 8600 taught by Professor Ferig during the Spring '11 term at University of Georgia Athens.
- Spring '11