Suppose that the average annual malpractice cost is $50,000 for reckless doctors and $1,000 for careful doctors. If half of an insurance company's insured doctors are reckless, the company will earn zero economic profit if the price of insurance is $nothing. If careful doctors are not willing to pay more than $5,000 for insurance, the price required for zero economic profit is $nothing.

1. $25,500

2. $50,000

Explanation:

Company will earn zero economic profit if the price is $25,500

Insurance price = (50% x $50,000) +  (50% x $ 1,000)

Insurance price = $25,000 + $500

Insurance price = $25,500

If the careful doctors are not willing to pay more than $5,000 for insurance then I am afraid reckless doctors will take the insurance with price of $50,000

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anjan should should report alteast 5000 on the first apyment and 10,000 each year

explanation: