Consider a hypothetical small city with a single hospital. Assume that demand for hospital discharges is given by P = 30 - Q, where P Is measured in thousands of dollars and Q is measured in hundreds of discharges (MR = 30 - Q for the monopolist hospital). Discharges are produced at the hospital at a constant marginal cost of $12 (also in thousands of dollars).

1. How many hundreds of discharges will there be this year? What will be the price charged? What will the profits be for the hospital? What is the consumer surplus?
2. If the hospital can perfectly price discriminate, how many hundreds of discharges will be provided? What are the profits of the hospital?
3. If the hospital wanted to use some of those profits to cost-shift and serve all people who sought admission and discharge from their hospital, what would their losses be from serving these additional patients? What would their overall profits be?
4. If their average cost per discharge was $20,000 (20) would they be able to serve all who came to their hospital and still make a profit?
5. Suppose that this city is located across a river from a larger city and a new bridge across the river is built. This makes access to all the hospitals across the river much easier and therefore makes the market more competitive. If the market became very competitive, what would the price and quantity be? What is the consumer surplus?