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Quantity | Total Cost 0 | $50 1 | $90 2 | $110 3 | $115 4 | $140 5 | $185 6 | $250 7 | $335 8 | $440 9 | $565 10 | $710 Sophia's Lighting Store sells Good H in a perfectly competitive market with a downward-sloping demand curve and an upward-sloping supply curve. The market price is $140 per unit. (a) Calculate the average fixed cost of producing 2 units. Show your work. (b) Identify the profit-maximizing quantity. Explain using marginal analysis. (c) Calculate the economic profit at the profit-maximizing quantity you identified in part (b). Show your work. (d) Based on your answer to part (c), will the number of firms in the industry increase, decrease, or stay the same in the long run? Explain. (e) Based on your answer to part (c), will the market price increase, decrease, or stay the same in the long run? Explain. (f) The income elasticity of demand for Good H is 1.3, and the cross-price elasticity of demand for desk lamps with respect to the price of Good H is -0.9. Based on your answer to part (e), what will happen to the demand for desk lamps? Explain. (g) Now assume that the market in which Sophia's Lighting Store operates is in long-run equilibrium at a price of $130 per unit. (i) Suppose the government imposes a price floor at $150 per unit on the market for Good H. Will consumer surplus in the market for Good H increase, decrease, or stay the same in the short run as a result of the price floor? Explain. (ii) Suppose instead the cost of energy, a variable cost for Sophia's Lighting Store, increases. Will the profit-maximizing quantity of Good H for Sophia's Lighting Store increase, decrease, or stay the same in the short run? Explain.

          Quantity | Total Cost
0 | $50
1 | $90
2 | $110
3 | $115
4 | $140
5 | $185
6 | $250
7 | $335
8 | $440
9 | $565
10 | $710

Sophia's Lighting Store sells Good H in a perfectly competitive market with a downward-sloping demand curve and an upward-sloping supply curve. The market price is $140 per unit.

(a) Calculate the average fixed cost of producing 2 units. Show your work.
(b) Identify the profit-maximizing quantity. Explain using marginal analysis.
(c) Calculate the economic profit at the profit-maximizing quantity you identified in part (b). Show your work.
(d) Based on your answer to part (c), will the number of firms in the industry increase, decrease, or stay the same in the long run? Explain.
(e) Based on your answer to part (c), will the market price increase, decrease, or stay the same in the long run? Explain.
(f) The income elasticity of demand for Good H is 1.3, and the cross-price elasticity of demand for desk lamps with respect to the price of Good H is -0.9. Based on your answer to part (e), what will happen to the demand for desk lamps? Explain.
(g) Now assume that the market in which Sophia's Lighting Store operates is in long-run equilibrium at a price of $130 per unit.
(i) Suppose the government imposes a price floor at $150 per unit on the market for Good H. Will consumer surplus in the market for Good H increase, decrease, or stay the same in the short run as a result of the price floor? Explain.
(ii) Suppose instead the cost of energy, a variable cost for Sophia's Lighting Store, increases. Will the profit-maximizing quantity of Good H for Sophia's Lighting Store increase, decrease, or stay the same in the short run? Explain.

Quantity | Total Cost
0 | 50
1 |90
2 | 110
3 |115
4 | 140
5 |185
6 | 250
7 |335
8 | 440
9 |565
10 | 710

Sophia's Lighting Store sells Good H in a perfectly competitive market with a downward-sloping demand curve and an upward-sloping supply curve. The market price is140 per unit.

(a) Calculate the average fixed cost of producing 2 units. Show your work.
(b) Identify the profit-maximizing quantity. Explain using marginal analysis.
(c) Calculate the economic profit at the profit-maximizing quantity you identified in part (b). Show your work.
(d) Based on your answer to part (c), will the number of firms in the industry increase, decrease, or stay the same in the long run? Explain.
(e) Based on your answer to part (c), will the market price increase, decrease, or stay the same in the long run? Explain.
(f) The income elasticity of demand for Good H is 1.3, and the cross-price elasticity of demand for desk lamps with respect to the price of Good H is -0.9. Based on your answer to part (e), what will happen to the demand for desk lamps? Explain.
(g) Now assume that the market in which Sophia's Lighting Store operates is in long-run equilibrium at a price of 130 per unit.
(i) Suppose the government imposes a price floor at150 per unit on the market for Good H. Will consumer surplus in the market for Good H increase, decrease, or stay the same in the short run as a result of the price floor? Explain.
(ii) Suppose instead the cost of energy, a variable cost for Sophia's Lighting Store, increases. Will the profit-maximizing quantity of Good H for Sophia's Lighting Store increase, decrease, or stay the same in the short run? Explain.

Added by Diego D.

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