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Q. Some economists have suggested that the best way to control medical costs is to remove the profit incentive for health care providers, particularly hospitals. This would involve making all hospitals not-for-profit institutions. Use the utility maximization model to enlighten the likely impact such a policy would have on the cost of producing hospital services. Illustrate what would happen if instead a policy was instituted that reduced barriers to entry in the hospital sector also therefore made the marketplace more competitive?
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