A government agency notifies the physicians' group in Problem 30-10 that to continue providing services in the community, the group must document its activities. The resulting paperwork expenses raise the cost of each unit of health care services that the group provides. 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.