QUESTION 18 A cattle rancher and a wheat farmer own adjacent properties that may

Question

QUESTION 18 A cattle rancher and a wheat farmer own adjacent properties that may or may not be separated by a fence. The accompanying table identifies the annual profit annual cost of $25,000 ence o Fence 10,000 Cattle Rancher Wheat Farmer If legal rights are assigned to the wheat farmer so that the cattle rancher is liable for any damage caused by his cattle to the wheat crop, then the O a farmer will not allow the rancher to stay in business. O b. rancher will pay to build the fence. O c rancher will choose to compensate the farmer for damages O d. rancher will choose to close his ranch. e. rancher will be indfferent toward neither building the fence nor compensating the farmer for damages QUESTION 19 A company produces at an output level where marginal revenue is equal to marginal cost and has the following revenue and cost levels: Marginal cost curve intersects the average variable cost curve at $140. Marginal cost curve intersects the average total cost curve at $150. Marginal cost curve intersects the marginal revenue curve at $200. What would you suggest this firm should do in the short run? a. The firm should continue to produce at a profit level of $10 per unit. 0 b. The firm should continue to produce at a profit level of S60 per unit. O c. The firm should continue to produce at a loss. d. The firm should shut down. O e. The firm should continue to produce at a proft level of $50 per unit. QUESTION 20 A distortion in the health care market can occur when the O a. government's licensing of medical care providers reduces supply, which, in turn, increases the equilibrium price. b, involvement of health maintenance organizations discourages efficiency in healthcare expenditures. c, existence of health insurance encourages consumers not to seek preventive care. of the asthcoarn expendtureas ecaune docton are guaranteda paymnt thadsthe art eulb O e. demand for health care is inelastic.

Explanation / Answer

Q18 opton b because cost are less than profit he can earn

Q19 option e.

Profit = TR – TC

TR = q*MR = 200q

TC = q*ATC = 150q

Profit = 50Q

Per unit profit = 50q/q

=50 Thus option e is correct

Q20: option a)

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