Question
A mobile dental clinic is planning to offer teeth cleaning and dental evaluations in a rural town. Demand comes from two sources: children (defined as
A mobile dental clinic is planning to offer teeth cleaning and dental evaluations in a rural town. Demand comes from two sources: "children" (defined as people less than 18 years old) and "adults" (defined as people 18 years old or older). The inverse demand curves for the two groups are: PC = 7 1 20 QC QC = 140 20 PC PA = 9 1 10 QA QA = 90 10 PA The clinic can charge a different price for children and adults. The marginal cost per child is $5 and the marginal cost per adult is $7. The mobile clinic cannot accommodate more than 40 total people (children plus adults). 11. A pandemic hits the rural town where the mobile dental clinic was planning to operate. As a result, they have to space people out and so can only serve 21 people (21 total adults plus children). Assuming that the clinic re-optimizes its prices in light of its reduced capacity (suppose that there are no regulations that prevent the clinic from changing its prices), by how much does the pandemic reduce the clinic's profits (round your answer to the nearest 10 cents).
A. $2.10
B. $2.30
C. $2.50
D. $2.70 E.
None of the other choices is correct
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started