Question

Given the same demand and cost conditions, a revenue maximizing hospital will: a. Charge a higher price and produce more medical care than a profit maximizing hospital b. Charge a higher price and produce more medical care than an output maximizing hospital c. Charge a higher price and produce less medical care than an output maximizing hospital d. Charge a higher price and produce less medical care than a profit maximizing hospital

Answer 1

c. Charge a higher price and produce less medical care than an output maximizing hospital

Step-by-step explanation:

A revenue maximising firm's goal is to make the highest possible profit while the goal of an output maximising firm is to produce the highest possible number of output.

So, for a a revenue maximizing hospital, price would be higher but it would produce less medical care due to the law of demand.

The law of demand says the higher the price, the lower the quantity demanded and the lower the price, the higher the quantity demanded.

While for the output maximising hospital, it would produce more output and charge a lower price than a revenue maximizing hospital