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Two doctors, doctor #1 (D1) and doctor #2 (D2) have the following marginal cost curves for supplying immunizations. MC(D1) = 20 + 5 Q MC(D2)
Two doctors, doctor #1 (D1) and doctor #2 (D2) have the following marginal cost curves for supplying immunizations.
MC(D1) = 20 + 5Q
MC(D2) = 200 + 10Q
They receive a base salary no matter what they do and receive a bonus payment of $10 for every immunization they perform above 19 immunizations. They get paid $0 for all immunizations at or below 19 immunizations.
a.) How many immunizations will each doctor perform?
b.) How much money will the pay for performance scheme cost the insurer?
c.) What would each doctor's supply curve look like?
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