QUESTION 27 3 points Save Answer Price and cost (dollars per appoinement) 70 60

Question

QUESTION 27 3 points Save Answer Price and cost (dollars per appoinement) 70 60 50 MC ATC 30 20 10 MR 240 Qantity (appointments per hour) Use the figure above to answer this question. Mary is the only veterinarian in a small town and ronts a space for her practice. If Mary's landlord decidod to chargepor hour in rent, Mary would $20 more: earn $O oconomic profit S30 more; operate on the inelastic portion of her demand curve $10 less; raise her prices and earn a higher profit $20 more: sti" earn an economic profit because she is a monopoist $30 more: earn $O oconomic profit QUESTION 28 3 points Save Answer When a regulatory agency uses rate of return regulation, the o agency is able to el minate the deadweight loss. o the agency is using a form of marginal cost pricing oregu atod firm's profit must be maximized for the markot to be officient. O regulated firrm must receive a government subaidy. O firm's managers have an incentive to inflate the firm's costs.

Explanation / Answer

Answer.)

Q27.) $20 more; earn zero dollar economic profit

Note at profit-maximizing quantity 4 appointments per hour , ATC is $30 per appointment and price is $50. Now, if Mary's landlord decided to charge $20 more per hour in rent then ATC will increase up to $50 equal to price so that economic profits are zero.

Q28.) Firm's managers have an incentive to inflate the firm's costs.

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