(23 points) In the isolated city of Nowheresville, there are four hospitals each with equal market shares of 25% in the market for a specific elective surgery. For each hospital, q=20 per month, and the price is $3125, and the hospitals all have the same marginal cost for the surgery. Assume their pricing is consistent with Cournot equilibrium. (a) Recently, two teams of health economists analyzed different aspects of the market. - The first conducted a demand analysis and estimated the demand curve to be Q=50,000P4/5. - The second conducted an analysis of the hospitals' costs and estimated the constant marginal cost to be $2000 at each hospital. Are these two analyses consistent with one another? If so, explain. If not, what estimated marginal cost would be consistent with estimated demand curve? (b) Assume that we are confident in the demand analysis. A recent spat of malpractice suits leads one of the hospitals to stop offering the surgery. Patients are expected to be absorbed equally among the remaining three providers. Assuming their pricing is consistent with Cournot equilibrium, what is expected increase in the price-cost-markup? (23 points) In the isolated city of Nowheresville, there are four hospitals each with equal market shares of 25% in the market for a specific elective surgery. For each hospital, q=20 per month, and the price is $3125, and the hospitals all have the same marginal cost for the surgery. Assume their pricing is consistent with Cournot equilibrium. (a) Recently, two teams of health economists analyzed different aspects of the market. - The first conducted a demand analysis and estimated the demand curve to be Q=50,000P4/5. - The second conducted an analysis of the hospitals' costs and estimated the constant marginal cost to be $2000 at each hospital. Are these two analyses consistent with one another? If so, explain. If not, what estimated marginal cost would be consistent with estimated demand curve? (b) Assume that we are confident in the demand analysis. A recent spat of malpractice suits leads one of the hospitals to stop offering the surgery. Patients are expected to be absorbed equally among the remaining three providers. Assuming their pricing is consistent with Cournot equilibrium, what is expected increase in the price-cost-markup