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5. (16 marks) Suppose Ontario's healthcare system is subject to a physician cooperative (i.e. cartel) whose objective is to maximize physician salary by limiting
5. (16 marks) Suppose Ontario's healthcare system is subject to a physician cooperative (i.e. cartel) whose objective is to maximize physician salary by limiting physician supply. Letting q denote the number of physicians employed by the healthcare system, the physician salary curve is n(q) = 200,000+ 20q -0.001q2 while the competitive physician inverse supply curve is r(q)=200,000+ 5q. The first function represents the salary arising for a given level of employment while the latter represents the minimum salary required to induce a given level of employment to be supplied. a. Identify two distinct mechanisms, as discussed in lecture, by which the cooperative can control physician supply.
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