Assume that a competing company enters the market and sets a price that is $100 above...
Assume that a competing company enters the market and sets a price that is $100 above the hospital's marginal cost. The same demand curve applies of P=5000-150Qd
Calculate the potential quantity demanded for the new competitor when the price is set at $300. This will be the potential quantity demanded because some people will still use the hospital and the quantity demanded will reflect the max possible for the competitor.
Homework Answers
When P = 300
Then from demand curve :
300 = 5000 - 150Q
150Q = 4700
Q* = 4700/150
Q* = 31.33
So potential Quantity Demanded = 31.33 units
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