### Understanding Long-Run Equilibrium in the Market for ToothpasteSparkle is one firm of many in the market for toothpaste, which is in long-run equilibrium.#### Question:Indicate which of the following graphs accurately reflects Sparkle’s demand curve, marginal-revenue (MR) curve, average-total-cost (ATC) curve, and marginal-cost (MC) curve.#### Options:##### Graph A:- **Demand Curve**: Downward sloping curve,- **Marginal Revenue (MR)**: Downward sloping curve, starting from a higher price level compared to MR.- **Average Total Cost (ATC)**: U-shaped curve.- **Marginal Cost (MC)**: Upward sloping curve intersecting ATC at its lowest point.##### Graph B:- **Demand Curve**: Downward sloping curve,- **Marginal Revenue (MR)**: Separate downward sloping curve, starting from a higher price level compared to Demand.- **Average Total Cost (ATC)**: U-shaped curve.- **Marginal Cost (MC)**: Upward sloping curve intersecting ATC at its lowest point.The correct graph that reflects Sparkle's demand curve, marginal-revenue curve, average-total-cost curve, and marginal-cost curve in a long-run equilibrium situation will be either Graph A or Graph B.- Select **A** if Graph A is correct.- Select **B** if Graph B is correct.Please make your selection based on the correct representation of economic concepts described.**Note:** In long-run equilibrium for a perfectly competitive firm, the demand curve (price) is tangent to the lowest point on the ATC curve, and the MC curve intersects both the ATC and MR at this point.

Sparkle is one of the many firms in market of toothpaste which means it is talking about…

Sparkle is one firm of many in the market for toothpaste, which is in long-run equilibrium. Indicate which of the following graphs accurately reflects Sparkle's demand curve, marginal-revenue (MR) curve, average-total-cost (ATC) curve, and marginal-cost (MC) curve. A Demand Demand ATC ATC MC- MC MR MR Quantity of Sparkle Toothpaste Quantity of Sparkle Toothpaste A Price, Cost, Revenue Price, Cost, Revenue

Sparkle is one firm of many in the market for toothpaste, which is in long-run equilibrium. Indicate which of the following graphs accurately reflects Sparkle's demand curve, marginal-revenue (MR) curve, average-total-cost (ATC) curve, and marginal-cost (MC) curve. A Demand Demand ATC ATC MC- MC MR MR Quantity of Sparkle Toothpaste Quantity of Sparkle Toothpaste A Price, Cost, Revenue Price, Cost, Revenue

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter16: Monopolistic Competition

Section: Chapter Questions

Problem 8PA

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Student Resources Working at Clayton.... 3/3 practice Gigantic Pharmaceutical Corporation has a patent on a prescription drug, making it the only manufacturer of that prescription drug. Gigantic is currently earning a positive economic profit. (a) Draw a correctly labeled graph for Gigantic and show each of the following. (i) The profit-maximizing quantity, labeled QG (ii) The profit-maximizing price, labeled PG (iii) The average total cost curve, labeled ATC (iv) The area representing the consumer surplus, shaded completely (b) Suppose the demand for the prescription drug increases, and Gigantic hires its warehouse workers in a perfectly competitive labor market. (i) What will happen to Gigantic's demand for warehouse workers? Explain. (ii) What will happen to the wage rate Gigantic pays its warehouse workers and the number of warehouse workers it hires? (c) After Gigantic's patent expires, another firm enters the prescription drug market and produces an identical drug that sells for…
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5. Exercise 10.7 Royersford Knitting Mills, Ltd., sells a line of women's knit underwear. The firm now sells about 20,000 pairs a year at an average price of $40 each. Fixed costs amount to $240,000, and total variable costs equal $480,000. The production department has estimated that a 10 percent increase in output would not affect fixed costs but would reduce average variable cost by 40 cents. The marketing department advocates a price reduction of 5 percent to increase sales, total revenues, and profits. The arc elasticity of demand with respect to prices is estimated at -2. The proposal to cut prices by 5 percent would |$ and total profits would be $ total revenues from $800,000 to $ Total costs would be If average variable costs are assumed to remain constant over a 10 percent increase in output, total profits after a 5 percent price cut would be S
2. Profit maximization of a seller in a competitive price-searchermarket Consider De Virtuose Cupcake, a cupcake shop in a competitive price-searcher market. The following graph shows its demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. Assume that the shop is operating in the short run. Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity. If the shop is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit. If the shop is suffering a loss, use the purple rectangle (diamond symbols) to shade in the area representing its loss. At the profit-maximizing output and price, the shop’s profit is equal to --- Given the profit-maximizing choice of output and price, there are -- shops in the industry than there wwould be in long run equilibrium. Please show me your work. Graph is attached as a picture. Thanks, Nasima