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Nurses Pay is $80K/year and Physician Pay is $300K/year. The clinic is running with 2 physicians at a physician to nurse factor input ratio of
Nurses Pay is $80K/year and Physician Pay is $300K/year. The clinic is running with 2 physicians at a physician to nurse factor input ratio of 0.2. However, there is an increase in physician pay to $330K/year. The firm will now run with 1 physician with the physician to nurse factor input ratio of 0.072.In addition please also calculate savings with the new factor input ratio. Then calculate the elasticity of substitution. What can you say about the type of service provided by this clinic? Please explain.
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