1. This question deals with the concept of a residual claimant. a. Who are the explicit residual claimants of a for-profit hospital?

1. This question deals with the concept of a residual claimant.

a. Who are the explicit residual claimants of a for-profit hospital?

b. Are than any implicit residual claimants of a for-profit hospital? If so, who are they?

c. Are there any explicit residual claimants in a non-profit hospital? If so, who are they?

d. Are there any implicit residual claimants in a non-profit hospital? If so, who are they?

2. This question deals with the costs a hospital faces.

a. What is the difference between short run costs and long run costs?

b. Give an example of a cost that is fixed in the short run and one that is variable in the short run for a hospital.

3. Suppose we are analyzing an area that has many similar hospitals. Draw a graph that illustrates the market supply and market demand curve for hospital services in the area. I also want you to draw the demand curve for hospital services that any one hospital faces.

4. Sketch the Production Possibility Frontier of quantity (N) and quality (S) for a hospital and label the utility maximizing quantity-quality pair as (N*, S*). Also sketch the indifference curve that runs through (N*, S*).

5. What evidence suggests that the market for nurses can be thought of as a Monopsony? Sketch a graph of the labor market for nurses and label the "shortage" that a Monopsony predicts.