3. Business expansion Suppose that you operate a nurse-managed clinic and are considering extending the hours of operation into the evenings to enable you to see more patients. Doing so will add to expense but also to revenue. The income statement of the organization appears below. In the right hand column are projected income and expenses if the expansion is implemented. The expansion is a take-it-or-leave-it decision, i.e., a partial expansion is not possible. Note that the expansion involves a drop in revenue per visit because it entails seeing patients with lower reimbursement. The average reimbursement falls from $50 ($287,500/5,750) to $48 ($414,000/8,625) as a result of the expansion. Questions: Show your work! a. What is the marginal cost increasing the number of patients (i.e., the cost of an additional patient)?

b. What is the marginal revenue (benefit) per visit of catering to the additional visits? c. On a purely economic basis, does it make sense to expand the clinic? Why or why not? Relate your argument to marginal revenue and marginal cost.