Week 1 Homework Narrative Amanda and Bartholomew, a lovely couple with degrees in medicine, own and operate a demonology clinic. The clinic is open for business Monday through Friday from 8:00 a.m. to 5:00 p.m. The thing is, many of their patients work for government or private sector and they have to take sick leaves to see the doctors during those days. Since most people do not work in weekends, Amanda and Bartholomew think they could attract many more patients if they open the clinic for business on Saturdays as well. This is because these patients could save some of their sick leaves. Is this a wise economic decision? Please help this lovely couple with their economic decision. Assume that each month has 4 weeks or 20 workdays (excluding weekends). Calculate the marginal costs and benefits for the entire month (4 Saturdays). Amanda and Bartholomew are planning to open the clinic on Saturdays only for the next 5 years. This is because they want to make some extra cash to make the payments to the bank less burdensome (see below). Here are some pertinent facts (these are the only facts to consider. Please do not confuse Amanda and Bartholomew with any other extraneous information): 1. Because of its prime location, the monthly rent on the clinic is $7,000, regardless of the number of days the clinic is open for business. This rent will remain constant for the next five years. 2. They pay $4,000 per month to a local bank for a loan they took out a while back to buy some state-of-the-art medical equipment. This payment will continue for the next five years. 3. They pay a fixed monthly insurance premium of $3,000 for theft, fire, and things like that. 4. They pay a base liability (malpractice) insurance premium of $5,000 per month that excludes weekend practices. 5. For each Saturday that the clinic is open for business, the couple have to pay an additional $600 in liability insurance premium. 6. Instead of running their own medical business, Amanda and Bartholomew could work for a well-known and well-respected health management organization (HMO) for a combined monthly salary of $65,000 (yes, you read it right). 7. Five years ago, they installed new heating, ventilation, and air-conditioning (HVAC) system with special filters for $15,000. Now it is worth only $3,000 in the second-hand market. 8. Two years ago, they bought new furniture for the waiting room for $12,000. It is now worth only $5,000. 9. For each day that the clinic is open for business, they have to pay $7,000 in wages and salaries to their staff (the receptionist and technicians) 10. The cost of electricity and natural gas for cooling and heating, as well as the water bill is $200 per workday. Page 1 of 211. On Saturdays, Amanda teaches biochemistry in a local university for adult students, which she needs to give up if they open the clinic an extra day. She makes $5,000 per month for those lectures. 12. Capital (such as the medical equipment, the HVAC system, and the furniture) lose value at an estimated rate of $200 per business day (this is called depreciation). 13. If they open the clinic for business on Saturdays, their total monthly revenue will increase by $35,000 (revenue is the money received from patients before subtracting out the costs). Please Note: Enter the numbers on Canvas without dollar signs or comma separators. Be careful about the number of zeroes you enter
