This topic contains a solution. Click here to go to the answer

Author Question: The observation that the demand curve for grape jelly shifts rightward every time the price of ... (Read 67 times)

berenicecastro

  • Hero Member
  • *****
  • Posts: 581
The observation that the demand curve for grape jelly shifts rightward every time the price of peanut butter falls means that grape jelly and peanut butter are
 
  A) complements.
  B) substitutes.
  C) inferior goods.
  D) normal goods.

Question 2

The demand and cost schedules for a firm in monopolistic competition are in the above tables.
 
  What is the profit-maximizing level of output and price? What amount of profit is the firm earning? Is this firm in a short-run or long-run equilibrium? Why?



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

s.meritte

  • Sr. Member
  • ****
  • Posts: 306
Answer to Question 1

A

Answer to Question 2

To determine the quantity produced, the firm will set marginal cost equal to marginal revenue. Therefore it is necessary to determine the marginal revenue. The marginal revenue going from 3 to 4 units is 12 and the marginal revenue going from 4 to 5 units is 8. Thus the marginal revenue at 4 units is 10, which equals the marginal cost. Therefore the firm produces 4 units. The demand schedule shows that for 4 units, the price will be 16 per unit. The firm's economic profit per unit equals the price, 16, minus its average total cost, 10.50, or an economic profit of 5.50 per unit. The firm produces 4 units, so its total economic profit is 22.00. The firm is in a short-run equilibrium because it is able to earn an economic profit. In the long run, entry will decrease its demand so that it no longer can earn an economic profit.




berenicecastro

  • Member
  • Posts: 581
Reply 2 on: Jun 29, 2018
Wow, this really help


Laurenleakan

  • Member
  • Posts: 309
Reply 3 on: Yesterday
Gracias!

 

Did you know?

No drugs are available to relieve parathyroid disease. Parathyroid disease is caused by a parathyroid tumor, and it needs to be removed by surgery.

Did you know?

Children with strabismus (crossed eyes) can be treated. They are not able to outgrow this condition on their own, but with help, it can be more easily corrected at a younger age. It is important for infants to have eye examinations as early as possible in their development and then another at age 2 years.

Did you know?

More than one-third of adult Americans are obese. Diseases that kill the largest number of people annually, such as heart disease, cancer, diabetes, stroke, and hypertension, can be attributed to diet.

Did you know?

The shortest mature adult human of whom there is independent evidence was Gul Mohammed in India. In 1990, he was measured in New Delhi and stood 22.5 inches tall.

Did you know?

Medication errors are more common among seriously ill patients than with those with minor conditions.

For a complete list of videos, visit our video library