S.
Klepper, Economics
73-100, Fall 2009
In
recent years, hospitals in many cities, including Pittsburgh, have been
merging. Consider a city in which all
the hospitals merged into one entity that monopolized the market. Prior to the merger, assume the market was
perfectly competitive and in long-run equilibrium
Which
of the following statements correctly describe the effects of this change in
the structure of the hospital market?
Mark true for a correct statement and false for an incorrect one and provide
explanations for each of your answers.
_____1. The market demand curve for hospital services shifted to the right.
_____2. The price of hospital services increased.
_____3. The total quantity of hospital services consumed by buyers declined.
_____4. The marginal cost of the marginal unit of hospital services was less than the price charged for hospital services.
_____5. The marginal revenue from the marginal unit of hospital services equaled the marginal cost of the marginal unit of hospital services.