For performance categories, state in a phrase why your answer is yes or no. 3. T
ID: 1119269 • Letter: F
Question
For performance categories, state in a phrase why your answer is yes or no. 3. The first sushi restaurant opens in town. Initially are very cautious about eating tiny portions of raw fish, as this is a town where large portions of grilled meat have always been popular. Soon, however, an influential health report warns consumers against grilled meat and suggests that they increase their consumption of fish, especially raw fish. The sushi restaurant becomes very popular and its profits increase a. What will happen to the short-run profit of the sushi restaurant? What will happen to the number of sushi restaurants in the town in the long-run? Will the first sushi restaurant be able to sustain its short- run profit over the long run? Explain your answers. b. Local steakhouses suffer from the popularity of sushi and start incurring losses. What will happen to the number of steakhouses in town in the long run? Explain your answer 4 Suppose that Comcast has a cable monopoly in Philadelphia. The following table gives Comcast's demand and costs per month for subscriptions to basic cable (for simplicity the number of subscribers is artificially small). Remember to write the formula above each column Price Quantity Total Revenue Marginal Revenue Total cost Marginal cost $27 $56 26 4 73 25 5 91 24 6 110 23 7 130 22 8 151Explanation / Answer
3.
A.
In the short run, the profit of the sushi restaurant will increase and the sushi restaurant will earn the positive economic profit. After seeing this, the new sushi restaurants will join the industry. Hence, in the long run, more sushi restaurants will operate to cater the consumers and economic profit will become zero. At his point, the long term equilibrium will be established. So, the first sushi restaurant will not be able to sustain the profit, earned in the short run to the long run.
B.
Now, the local steakhouses suffer the losses and the price will become lower than the cost or even lower than the variable cost. It will cause the negative economic profit. As a result, local steakhouse firms will exit the industry in the long run. It will drive economic profit back to zero and long run equilibrium is established.
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