Choose the answer that best describes what is likely tohappen in the long run in this industry.O Firms will enter this industry, increasing demand andmarginal revenue at the firm level, untilindustry-wide economic profit is positive.Firms will enter this industry, decreasing demandand marginal revenue at the firm level, untilindustry-wide economic profit is equal to zero.O Firms will exit this industry, decreasing demand andmarginal revenue at the firm level, untilindustry-wide economic profit is equal to zero.Firms will exit this industry, increasing demand andmarginal revenue at the firm level, untilindustry-wide economic profit is negative. 17 of 16BNW is one of many producers of luxury wheelchairs, whichare differentiated to appeal to different market niches. BNW'sPrice per chairrelevant demand and cost curves are depicted in the graph.$2,000AveragetotalUse this graph to answer the questions. Assume that there are1,800Marginalcostno significant barriers to entry.cost1,600Determine BNW's profit-maximizing price and quantity.1,4001,2001,000price per chair: $800600400quantity of chairs:chairs200DemandMarginal revenue100 200 300 400 500 600 700 800 900Calculate BNW's profit.Chairs per weekBNW's profit: $

The firm produces at MR=MCwhereQ=300 and P=1200Price per chair:$1200Quantity of chairs: 300ATC=800Profit =(P-ATC)*Q=(1200-800)*300=120000The profit of BNW is $120000The market is a monopolistically competitive so there will be zero economic profit as the market has free entry and exit.The market firm currently making a profit so new firms will enter the market which will decrease demand for existing firms and decrease profit to zero in the long run.The correct option is option 2Firms will enter this industry, decreasing demandand marginal revenue at the firm level, untilindustry-wide economic profit is equal to zero.

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Economics

BNW is one of many producers of luxury wheelchairs, which are differentiated to appeal to different market niches. BNW's Price per chair relevant demand and cost curves are depicted in the graph. $2,000 Average total Use this graph to answer the questions. Assume that there are no significant barriers to entry. Marginal Cost 9 1,800 cost 1,600 Determine BNW's profit-maximizing price and quantity. 1,400 1,200 1,000 price per chair: $ 800 600 400 quantity of chairs: chairs 200 Demand Marginal revenue 100 200 300 400 500 600 700 800 900 Calculate BNW's profit. Chairs per week BNW's profit: $

BNW is one of many producers of luxury wheelchairs, which are differentiated to appeal to different market niches. BNW's Price per chair relevant demand and cost curves are depicted in the graph. $2,000 Average total Use this graph to answer the questions. Assume that there are no significant barriers to entry. Marginal Cost 9 1,800 cost 1,600 Determine BNW's profit-maximizing price and quantity. 1,400 1,200 1,000 price per chair: $ 800 600 400 quantity of chairs: chairs 200 Demand Marginal revenue 100 200 300 400 500 600 700 800 900 Calculate BNW's profit. Chairs per week BNW's profit: $

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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