Sleek Sneakers Co. is one of many firms in the marketfor shoes.a. Assume that Sleek is currently earning short-runeconomic profit. On a correctly labeled diagram,show Sleek’s profit-maximizing output and price,as well as the area representing profit.b. What happens to Sleek’s price, output, and profitin the long run? Explain this change in words, andshow it on a new diagram.c. Suppose that over time consumers become morefocused on stylistic differences among shoe brands.How would this change in attitudes affect eachfirm’s price elasticity of demand? In the long run,how will this change in demand affect Sleek’s price,output, and profit?d. At the profit-maximizing price you identified inpart (c), is Sleek’s demand curve elastic or inelastic?Explain
Sleek Sneakers Co. is one of many firms in the market
for shoes.
a. Assume that Sleek is currently earning short-run
economic profit. On a correctly labeled diagram,
show Sleek’s profit-maximizing output and
as well as the area representing profit.
b. What happens to Sleek’s price, output, and profit
in the long run? Explain this change in words, and
show it on a new diagram.
c. Suppose that over time consumers become more
focused on stylistic differences among shoe brands.
How would this change in attitudes affect each
firm’s
how will this change in demand affect Sleek’s price,
output, and profit?
d. At the profit-maximizing price you identified in
part (c), is Sleek’s demand curve elastic or inelastic?
Explain
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