Increasing marginal costs of production

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The discussion on price ceiling supposed that the medical industry faces increasing marginal costs of production. Suppose a for profit, monopolistic hospital is experiencing economies of scale (ie a downward sloping average and marinal cost curve) in the relevant range. discuss in writing the proglems associated with a pric ceiling set where the demand curve intersects the marginal cost curve and a price ceiling set where the demand curve intersects the average cost curve. Think in terms of allocative efficiency and financial solvency.

Reference no: EM131198508

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