-Use the figure above to answer this question.Mary is the only veterinarian in a small town and rents a space for her practice.If Mary's landlord decided to charge ________ per hour in rent,Mary would ________.
A) $20 more; earn $0 economic profit
B) $20 more; still earn an economic profit because she is a monopolist
C) $30 more; earn $0 economic profit
D) $10 less; raise her prices and earn a higher profit
E) $30 more; operate on the inelastic portion of her demand curve

Question

-Use the figure above to answer this question.Mary is the only veterinarian in a small town and rents a space for her practice.If Mary's landlord decided to charge ________ per hour in rent,Mary would ________.
A) $20 more; earn $0 economic profit 
B) $20 more; still earn an economic profit because she is a monopolist 
C) $30 more; earn $0 economic profit 
D) $10 less; raise her prices and earn a higher profit 
E) $30 more; operate on the inelastic portion of her demand curve

Quizplus · Accepted Answer

Mary is currently earning an economic profit, as her total revenue is greater than her total cost. If her landlord decided to charge $20 more per hour in rent, her total cost would increase by $20. This would reduce her economic profit by $20, but she would still be earning an economic profit.

-Use the Figure Above to Answer This Question