The table below shows the total variable costs faced by

Last updated: 11/7/2023

The table below shows the total variable costs faced by Julia s Accessories Store for different quantities of Good E sold Quantity 1 2 59 3 CT 5 6 7 8 9 10 Total Variable Cost 35 73 113 154 198 248 303 360 421 498 Julia s Accessories Store sells Good E in a perfectly competitive market with a downward sloping demand curve and an upward sloping supply curve The market price is 62 per unit and the total fixed cost is 152 a Identify the profil maximizing quantity Explain using marginal analysis b Calculate the economic profit at the profit maximizing quantity you identified in part a Show your work c Calculate the average fixed cost of producing 8 units Show your work d Based on your answer to part b will the number of firms in the industry increase decrease or stay the same in the long run Explain c Based on your answer to part b will the market price increase decrease or stay the same in the long run Explain f The income elasticity of demand for Good E is 1 2 and the cross price elasticity of demand for bracelets with respect to the price of Good E is 0 6 Based on your answer to part e what will happen to the demand for bracelets Explain g Now assume that the market in which Julia s Accessories Store operates is in long run equilibrium i Suppose the market demand for Good E decreases Will the profit maximizing quantity of Good E for Julia s Accessories Store increase decrease or stay the same in the short run Explain ii Suppose instead the wages that Julia s Accessories Store pays its workers increase Will the profit maximizing