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Suppose that a purely competitive firm offers no health insurance to its employees. Let an employer mandate for health insurance be enacted. If this causes
Suppose that a purely competitive firm offers no health insurance to its employees. Let an employer mandate for health insurance be enacted. If this causes firms' marginal costs to increase, will the firm pay the full cost of the health insurance out of profits? Is the mandate likely to increase the firm's marginal costs? Provide a diagrammatic discussion and solution for the firm and the market.
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