A government agency determines that the entire community discussed in Problem 30-10 qualifies for a special program in which the government will pay for a number of health care services that most residents previously had not consumed. Many residents immediately make appointments with the community physicians' group. Given the information in Problem 30-10, what is the likely effect on the profit-maximizing price and the equilibrium quantity of health care services provided by the physicians' group in this community?
Problem 30-10
Suppose that a group of physicians establishes a joint practice in a remote area. This group provides the only health care available to people in the local community, and its objective is to maximize total economic profits for the group's members. Draw a diagram illustrating how the price and quantity of health care will be determined in this community.