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Niceville, Ohio, Only Has Two Dentists, While the Surrounding Communities

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Essay

Niceville, Ohio, only has two dentists, while the surrounding communities have many more on a per capita basis. The demand for dental services is such that these two dentists could agree to raise their prices (they play golf together every Saturday) and earn economic profit. Instead, they choose to price competitively and earn what other dentists earn. What might explain this?


Definitions:

Harvest

The process of gathering mature crops from the fields.

Revenue

The total amount of money received by a company or government from its activities, such as sales of goods and services, before any expenses are subtracted.

Profit

Profit is the financial return or gain achieved from an investment or business venture after subtracting all expenses and costs.

Equilibrium Price

The price at which the quantity of a good or service supplied matches the quantity demanded, leading to market balance.

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