Sleek Sneakers Co. is one of many firms in the market for shoes.

Assume that Sleek is currently earning short-run economic profits. On a correctly labeled diagram, show Sleek’s profit-maximizing output and price, as well as the area representing profit.

Sleek Sneakers Co. is one of many firms in the market for shoes.

What happens to Sleek's price, output, and profit in the long run? Explain this change in words, and show it on a new diagram.

Sleek Sneakers Co. is one of many firms in the market for shoes.

Suppose that over time consumers become more focused on stylistic differences among shoe brands. How would this change in attitudes affect each firm's price elasticity of demand? In the long run, how will this change in demand affect Sleek's price, output, and profits?

Sleek Sneakers Co. is one of many firms in the market for shoes.

Suppose that over time consumers become more focused on stylistic differences among shoe brands. How would this change in attitudes affect each firm’s price elasticity of demand? In the long run, how will this change in demand affect Sleek’s price, output, and profits?

Sleek Sneakers Co. is one of many firms in the market for shoes.

What happens to Sleek’s price, output, and profit in the long run? Explain this change in words, and show it on a new diagram.

The market for peanut butter in Nutville is monopolistically competitive and in long-run equilibrium. One day, consumer advocate Skippy Jif discovers that all brands of peanut butter in Nutville are identical. Thereafter, the market becomes perfectly competitive and again reaches its long-run equilibrium. Using an appropriate diagram, explain whether each of the following variables increases, decreases, or stays the same for a typical firm in the market.

profit

The market for peanut butter in Nutville is monopolistically competitive and in long-run equilibrium. One day, consumer advocate Skippy Jif discovers that all brands of peanut butter in Nutville are identical. Thereafter, the market becomes perfectly competitive and again reaches its long-run equilibrium. Using an appropriate diagram, explain whether each of the following variables increases, decreases, or stays the same for a typical firm in the market. a. price b. quantity c. average total cost d. marginal cost e. profit

The market for peanut butter in Nutville is monopolistically competitive and in long-run equilibrium. One day, consumer advocate Skippy Jif discovers that all brands of peanut butter in Nutville are identical. Thereafter, the market becomes perfectly competitive and again reaches its long-run equilibrium. Using an appropriate diagram, explain whether each of the following variables increases, decreases, or stays the same for a typical firm in the market.

quantity

You are hired as the consultant to a monopolistically competitive firm. The firm reports the following information about its price, marginal cost, and average total cost. Can the firm possibly be maximizing profit? If not, what should it do to increase profit? If the firm is profit maximizing, is the firm in a long-run equilibrium? If not, what will happen to restore long-run equilibrium?

$$P=M C, P>A T C$$

You are hired as the consultant to a monopolistically competitive firm. The firm reports the following information about its price, marginal cost, and average total cost. Can the firm possibly be maximizing profit? If not, what should it do to increase profit? If the firm is profit maximizing, is the firm in a long-run equilibrium?

If not, what will happen to restore long-run equilibrium?

$$P>M C, P<A T C$$

The market for peanut butter in Nutville is monopolistically competitive and in long-run equilibrium. One day, consumer advocate Skippy Jif discovers that all brands of peanut butter in Nutville are identical. Thereafter, the market becomes perfectly competitive and again reaches its long-run equilibrium. Using an appropriate diagram, explain whether each of the following variables increases, decreases, or stays the same for a typical firm in the market.

marginal cost

Consider a monopolistically competitive market with N firms. Each firm’s business opportunities are described by the following equations: Demand: Q = 100/N − P, Marginal Revenue: MR = 100/N − 2Q, Total Cost:

$$TC = 50 + Q^2$$

, Marginal Cost: MC = 2Q a. How does N, the number of firms in the market, affect each firm’s demand curve? Why? b. How many units does each firm produce? (The answers to this and the next two questions depend on N.) c. What price does each firm charge? d. How much profit does each firm make? e. In the long run, how many firms will exist in this market?

For each of the following pairs of firms, explain which firm would be more likely to engage in advertising.

a family-owned farm or a family-owned restaurant

You are hired as the consultant to a monopolistically competitive firm. The firm reports the following information about its price, marginal cost, and average total cost. Can the firm possibly be maximizing profit? If not, what should it do to increase profit? If the firm is profit maximizing, is the firm in a long-run equilibrium? If not, what will happen to restore long-run equilibrium?

$$P<M C, P>A T C$$