02 May Question: Amanda and Bartholomew, a lovely couple with degrees in medicine, own and operate a demonology cl…
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 the government or the 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 $5000, regardless of the business. This rent will remain constant for the next number of days the clinic is open for five years. 2. They pay $2,500 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 They pay a fixed monthly insurance premium of $500 for theft, fire, and things like that. They pay a base liability (malpractice) insurance premium of $5,000 per month that excludes weekend practices. For each Saturday that the clinic is open for business, the couple have to pay an additional $250 in liability insurance premium Instead of running a well-known health management organization (HMO) for a combined monthly salary of S60,000 (yes, you read it right) 3. 4. 5. 6. their own medical business, Amanda and Bartholomew could work for 7. Five years ago, they installed new heating, ventilation, and air-conditioning (HVAC) system with special filters for $10,000. 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 $8,000.It is now worth 9. For each day that the clinic is open for business, they have to pay $4,000 in wages and 10. The cost of electricity and natural gas for cooling and heating, as well as the water bill is only $5,000 salaries to their staff (the receptionist and technicians). $250 per workday age 1 of 2
11.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 12. Capital (such as the medical equipment, the HVAC system, and the furniture) lose value 13. If they open the clinic for business on Saturdays, their total monthly revenue will increase those lectures at an estimated rate of $200 per business day (this is called depreciation by $35,000 (revenue is the money received from patients before subtracting out the costs)
D 问题1 1分 Consider the information in the file named HW 1 Amanda and Bartholomew (Canvas Folder: Files/Homework Files/Homework 1 Files). The explicit monthly fixed cost with respect to the couple’s decision to open the clinic on Saturdays is X dollars, where X equals: Recall: The fixed cost will be incurred on a monthly basis whether or not the couple open the clinic on Saturdays. D! 问题2 1分 Consider the information in the file named HW 1 Amanda and Bartholomew Canvas Folder: Files/Homework Files/Homework 1 Files). The implicit monthly fixed cost with respect to the couple’s decision to open the clinic on Saturdays is X dollars, where X equals: Recall: The fixed cost will be incurred on a monthly basis whether or not the couple open the clinic on Saturdays.
问题3 1分 Consider the information in the file named HW 1 Amanda and Bartholomew (Canvas Folder: Files/Homework Files/Homework 1 Files). Whether the couple decide to open the clinic for business on Saturdays or not, the total monthly fixed cost of operations equals X dollars, where X equals: 问题4 1分 Consider the information in the file named HW 1 Amanda and Bartholomew (Canvas Folder: Files/Homework Files/Homework 1 Files). The sunk cost in this story equals X dollars, where X equals: Friendly Advice: You should ignore sunk costs in your own decisions.
D! 问题5 1分 Consider the information in the file named HW 1 Amanda and Bartholomew Canvas Folder: Files/Homework Files/Homework 1 Files). The explicit marginal cost with respect to the couple’s decision to open the clinic for business on Saturdays equals X dollars, where X equals Calculate the explicit marginal cost for the entire month assuming 4 Saturdays in a month). Hint: Marginal cost is the additional cost that the couple will incur only if they open the clinic on Saturdays
问题6 1 3 Consider the information in the file named HW 1 Amanda and Bartholomew Canvas Folder: Files/Homework Files/Homework 1 Files). The implicit marginal cost with respect to the couple’s decision to open the clinic for business on Saturdays equals X dollars, where X equals: Calculate the implicit marginal cost for the entire month assuming 4 Saturdays in a month). Hint: Marginal cost is the additional cost that the couple will incur only if they open the clinic on Saturdays.
问题7 1分 Consider the information in the file named HW 1 Amanda and Bartholomew (Canvas Folder: Files/Homework Files/Homewor Does it make economic sense to open the clinic for business on Saturdays? Yes it does. The monthly marginal benefit of this decision exceeds the monthly marginal cost. No it does not. The monthly marginal benefit of this decision falls short of the monthly marginal cost Yes it does. The monthly marginal benefit of this decision equals the monthly marginal cost.
1 3 In economics, what is the definition of the marginal cost of a decision or an activity? All the money spent to undertake that activity All the time spent to undertake that activity All the benefits forgone to undertake that activity
9 1 3 Roger is a third year student in a prestigious university. He has spent $150,000 on tuition so far. He has just received a very good offer from an NBA team, but he has to quit the school to join the team. He is however hesitant about doing this. He thinks that if he joins the team, that $150,000 that he paid to the university will go to waste. Roger’s way of thinking is an example of: Fixed cost fallacy. Sunk cost fallacy. Marginal cost fallacy
问题10 1 3 A convenient store owner is contemplating opening the store for business a few extra hours every day after 6:00 p.m. (currently the store closes at 6:00 p.m.). The marginal cost of each hour of operation is constant at $1,200 (cost of labor, electricity, etc.) The marginal benefit of additional hours, however, declines as we move further into the night as fewer people shop in late hours. In particular, the following are the marginal benefits for different hours: 6:00 to 7:00 p.m. $1,500 7:00 to 8:00 p.m. $1,300 8:00 to 9:00 p.m. $1,100 9:00 to 10:00 p.m. $900 10:00 to 11:00 p.m. $700 This information leads us to believe that the store will be open for business an additional X
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