In this question we want to explore the abortion market in Utah state in the U.S. and role of thegovernment in this market.

On the demand side of this market are women who want to have abortion,

and on the supply side of this market we have two types of providers namely; specialized clinics, and non- clinicssuch as private physicians.

Number of providers in each category is more than one and these numbers change over time.

All providers have control over their price and they facetheir own downward sloping demand curve.

Cost of entering this market is relatively high and it takes several years for a provider to enter to this market.

For simplicity in this question assume it takes exactly 3 years for aprovider to enter this market.

1)What is the relationship between abortion services in private physicians' offices and specialized clinics? Are they complements or substitutes?

2)What is the abortion market structure in Utah? Is it imperfect competitive or perfect competitive? Briefly explain your answer.

3)Many hospitals are located in metropolitan areas where rents are relatively higher than in other places. Around 1995 Utah governors passed a law that required non-clinic providers to locate within a certain physical distance from hospitals. What can you say about the impact of this policy on non-clinic providers' costs? Do their marginal and variable costs change?

4) What can you say about the impact of this policy on non-clinic providers' profit in the short run? Explain your answer by using the profit formula.

4) Assume before this regulation non-clinic providers had zero economic profits. What do you expect about the number ofnon-clinic providers in the market after the regulation?

5) Given your answer to parts(1) and (4), what do you expect to happen to the demand for clinical providers after the regulation?

6) One year after the regulation, what do you expect to happen to the price that clinical providers charge their consumers?

7)What do you expect to happen to the profit of clinical providersone year after the regulation?

8) What do you expect to happen to the number of clinical providers four years down the road?

9) Considering your answer to part (8), after entrance of new clinic providers to the market,what do you expect to happen to the demand for clinic providers that already existed in the market?