Suppose that a firm faces a downward-sloping demand curve and offers no health insurance to its…

Suppose that a firm faces a downward-sloping demand curve and offers no health insurance to its employees. Let an employer mandate for health insurance be enacted. If this causes the firm’s 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? 2. Suppose that a monopolist faced the following demand curve for its goods. Its marginal cost per unit of production is 50, and it faces no fixed costs (a) Calculate the profit-maximizing output and price. (b) Suppose the workers negotiate a health insurance benefit increase that increases marginal cost per unit from 50 to 60. Calculate the new profit-maximizing output and price. (c) Who bears the costs of the benefit increase? Why? 3. Use the demand-supply framework in Figure 23-2 to explain how increased cost sharing could lead to lower utilization and spending on health care

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