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Medical malpractice is the third leading cause of death in the US. Because of recent judicial decisions, a medical doctor has decided to buy malpractice
Medical malpractice is the third leading cause of death in the US. Because of recent judicial decisions, a medical doctor has decided to buy malpractice insurance, which we consider to be a fixed cost. Then
a. | The doctor should charge higher prices for her services to make up for the additional cost of the insurance | |
b. | The doctor should leave her prices unchanged as this is a sunk cost | |
c. | The doctor should charge lower prices to get more customers because the elasticity of demand is greater than one |
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