Use the data in Exercise 5.7. How would the average and marginal costs change if the rent rose to $100,000? What principle does your calculation illustrate?

5.11 A patient visits a clinic. She incurs $10 in travel costs and has a copayment of $20. The clinics total charge is $60. The clinic spends $9 to bill the insurance company for the visit and uses resources worth $51 to produce the visit. The insurance company pays the clinic $40 dollars and spends $11 to process the claim. Describe the cost of the visit from the perspective of the patient, the clinic, the insurer, and society.

5.12 A practice uses $ 40 worth of a dentists time $30 worth of a hygienists time, $10 worth of supplies, and $15 worth of a billing clerks time to produce a visit. The practice charges a patient $25 and charges for insurer $70. The insurer spends an additional $4 to the cost of the visit from the perspective of society, that patient, the practice, and the insurer?

5.13 Kim and Pat underwrite insurance. Each underwrites 50 accounts per month. Each account takes four hours to under underwriter. The value of their time is $40 per hour. Monthly cost for each are $1500 for an office, $2000 for a receptionist, and $2400 for a secretary. Calculate the average the average and incremental cost per case for Kim and Pat.

5.14 If Kim and merge their operations, they would need only one receptionist, and their rent for the joint office would be $2800 per month. All other values stay the same. Calculate the average and incremental cost per case for the merge office. Are there economic for scale at 100 accounts per month? Should Kim and Pat merge their offices?