Question

A company introduces paper towels and glass cleaner packaged together and, to the surprise of many, makes a fortune! Eventually rivals follow suit 10 1)The short-run initial price for each combo. unit is $ 3.50 2)SR initial ATC per unit is $ 3)Initial quantity is 2 1.75 1.50 4)Initially (circle one, please) profit/loss per unit is $ 5)Short-run total profit $ 6)The coefficient of elasticity between the reservation price, 80 100 150 where sales are zero units, and the short-run price (100q-0q/average q/reservation P equilibrium P/average P) of the short-run initial demand curve equals 7)Eventual price for each combo. unit is $ 8)Eventual ATC per unit is $ 10)Eventual long-run quantity is 9)Eventually profit per unit is $ 11)The coefficient of elasticity between the long-run reserve. price and long-run price of the lesser demand curve (80q-Oq/average qreservation P-equilibrium P/average which is less than/greater than (CIRCLE ONE PLEASE) the initial P) equals TRsr SRprofit LRprofit Q TC Psr Plr TRIr www.n owwwwonnen wwin wwww vininnh wwwn 195 1 100 80 2 150 170 70 60 3 180 145 220 120 50 95 5 280 Circle the short run and then the long run level of output! answers-80-20-20-10 00 1.75 1.75 2 2 2.0 3 350 80 80 95 100 140 175 180 190 195 195 200 200 255 260 340 435 480 475 40

Assistance with questions 1-11 please. I have already solved the bottom table, and do not need any help with that portion. Thanks in advance.

Answer 1

The steeper MR and Demand curve are for short run and the flatter MR and Demand curve are for long run.

Upward sloping convex curve is marginal cost and the downward sloping convex curve represents average total cost.

Equilibrium occurs where MC=MR.

In the short run MC=MR at Q=100

1. SR initial price is $3.50

Reason- At Q=100, corresponding to Demand curve for ahort run P=$3.5

2. SR initial ATC is $1.75

Reason- At Q=100, ATC =$1.75

3. Initial SR quantity is 100

4. Initially there is PROFIT per unit= $1.75

Reason- Per unit profit=(P-ATC) = (3.50-1.75)= $1.75

5. Short run total profit= $175

Reason- Profit= (P-ATC)*Q= (3.50-1.75)*100= $175

Note-According to HOMEWORKLIB RULES first four questions are answered.

For doubts comment below