The Qwik Serve Walk-In Clinic always has three M.D.s and eight R. N.s working at

Question

The Qwik Serve Walk-In Clinic always has three M.D.s and eight R. N.s working at is 24-hour clinic, which serves customers with minor emergencies and ailments. The clinic has hired an efficiency expert to examine its operational and make suggestions for reducing costs. For some of the medical procedures done at the clinic, experienced nurses can perform the medical tasks approximately as well as the physicians can, as long as the nurses are supervised by M.D.s. Since M.D.s are highly trained than nurses, the marginal product of M.D. s is higher than the marginal product of R.N.s. The manager of the clinic is confused by the efficiency consultant

Explanation / Answer

simply, because RNs are paid less.

Maximize efficiency where MPmd/Wmd = MPrn/Wrn

where Wmd = wages paid to MDs, Wrn = wages paid to RNs

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