2. Ralph opened a small shop selling bags of trail mix. The price of the mix $5 and the market for trail mix is very competitive. Ralph's curves are shown in the figure bellow. MC Price $8 7 6 5 4 3 2 1 AC 10 12 14 16 18 20 22 24 Quantity a. At what quantity will Ralph produce? Why?__ b. When the price is $5, shade the area of profit or loss in the graph provided and calculate Ralph's profit or loss (round up).__ c. If all other sellers of trail mix have the same marginal and average costs as Ralph, should he expect more or less competition in future? In the long run, will the price of trail mix rise or fall? What will be the price of trail mix in the long run? Price will rise/fall in the LR. Price in the LR will be $

2. Ralph opened a small shop selling bags of trail mix. The price of the mix $5 and the market for trail mix is very competitive. Ralph's curves are shown in the figure bellow. MC Price $8 7 6 5 4 3 2 1 AC 10 12 14 16 18 20 22 24 Quantity a. At what quantity will Ralph produce? Why? b. When the price is $5, shade the area of profit or loss in the graph provided and calculate Ralph's profit or loss (round up). c. If all other sellers of trail mix have the same marginal and average costs as Ralph, should he expect more or less competition in future? In the long run, will the price of trail mix rise or fall? What will be the price of trail mix in the long run? Price will rise/fall in the LR. Price in the LR will be $

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Firms In Competitive Markets

Section: Chapter Questions

Problem 7PA

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