In a competitive industry O a. Consumers have strong preferences across brands O b. all the firms have highly differentiated products O c. firms have no cost advantages O d. some firms have cost advantages, while others do not

Your company operates in a perfectly competitive market. You have been told that advertising can help you increase your sales in the short run. Would you create an aggressive advertising campaign for your product?

Andreas Day Spa began to offer a relaxing aromatherapy treatment. The film asks you how much to charge to maximize profits. The first two columns in Table 10.5 provide the price and quantity for the demand curve for treatments. The third column shows its total costs. For each level of output, calculate total revenue, marginal revenue, average cost, and marginal cost. What is the profit-maximizing level of output for the treatments and how much will the firm earn in profits?

What price will a perfectly competitive firm end up charging up the long run? Why?