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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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