A government agency notifies the physicians' group in Problem 29-10 that to continue providing services in the community, the group must document its activities. The resulting paperwork expenses raise the cost of each unit of health care services that the group provides. What is the likely effect on the profit-maximizing price and the equilibrium quantity of health care services provided by the physicians' group in this community?

Problem 29-10

Suppose that a group of physicians establishes ajoint practice in a remote area. This group providesthe only health care available to people in thelocal community, and its objective is to maximizetotal economic profits for the group's members.Explain how the price and quantity of health care will be determined in this community.