..il AT&T; 11:00 AM blackboard.campbell.edu Question 2 (25 points) Toothbrushes
ID: 1107996 • Letter: #
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..il AT&T; 11:00 AM blackboard.campbell.edu Question 2 (25 points) Toothbrushes are produced in a competitive constant-cost run equilibrium on Thursday. On Friday, the demand for new long-run equilibrium. industry, where the long-run is 5 days. The industry is in long- toothbrushes rises. On next Tuesday, the industry achieves its a. On which day or days (Thursday, Friday, or Tuesday) are toothbrushes most expensive? On which day or days are they least expensive? On which day or days are the fewest toothbrushes bought? firm) sell the most toothbrushes? On which day or days b. On which day or days are the most toothbrushes bought? c. On which day or days does Campbell Toothbrush (a typical does it sell the fewest? d. On which day or days are Campbell's profits highest? On which day or days are profits lowest? Question 3 (25 points) Widgets are produced by a constant-cost industry. The following chart shows the industry-wide demand curve and the marginal cost curve of each firm: DemandFirm's Marginal Cost Curve Price (S) Quantity Quantity Marginal Cost (3) 5 1500 0 12002 15 900 3 10 15 25 300 S The industry is currently in the long-run equilibrium with 600 firms. Each firm has fixed costs of S30 a. What is the price of a widget today? b. What is the profit of a widget firm today? c. In the long, what is the price of a widget? d. In the long run, how many firms exit the industry?Explanation / Answer
The demand for toothbrush rises on Friday.
a) There will be shortage in the short-run such that the price will be higher on Tuesday(the fifth day). Least expensive on Friday the day on which the demand rises.
b) Most tooth brush are brought on Tuesday. And fewest on Friday. The higher the price lower will be the quantity demanded.
c) Most sold on Friday, fewest on Tuesday.
d) Profit is highest on Tuesday. High quantity and high price in longrun(Tuesday). Lowest on Friday.
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