1. Jennifer's Toy Cars has fixed operating costs which total $25,000. It sells its toy cars for $55 per toy and it has variable operating cost of $30 per toy car. Every month it sells 3,000 toy cars. What is the firm's monthly earnings before interest and taxes?
2. Explain how marginal cost pricing is used by price setters in health care. Then, suppose a hospital was offered a capitation rate for a covered population of $40 per member per month (PMPM). Briefly explain how targeting costing would be applied to this situation.