If you need to indicate the missing ammount of each letter in the grahp then it will be like follows: For the first case: A = $9,600 + $5,000 + $8,000 = $22,600$22,600 + $1,000 – B = $17,000 B = $22,600 + $1,000 – $17,000 = $6,600$17,000 + C = $20,000 C = $20,000 – $17,000 = $3,000 D = $20,000 – $3,400 = $16,600 <span>E = ($24,500 – $2,500) – $16,600 = $5,400 </span><span>F = $5,400 – $2,500 = $2,900 </span>And now for the second case: G + $8,000 + $4,000 = $16,000 G = $16,000 – $8,000 – $4,000 = $4,000$16,000 + H – $3,000 = $22,000 H = $22,000 + $3,000 – $16,000 = $9,000(I – $1,400) – K = $7,000(I – $1,400) – $22,800 = $7,000 <span>I = $1,400 + $22,800 + $7,000 = $31,200 </span>J = $22,000 + $3,300 = $25,300 K = $25,300 – $2,500 = $22,800$7,000 – L = $5,000 <span>L = $2,000</span>
The bakery faces a flat demand curve because a firm in a perfectly competitive market is a price taker and the demand curve for a firm is equal to the price the supply curve is a part of Marginal cost above Average variable cost , so the supply curve is upward sloping
. The bakery is in the perfectly competitive market so it can earn positive, negative or zero economic profit in the short run and zero economic profit in the long run.
The price elasticity of demand is the degree of responsiveness of quantity demanded to change in price. A negative price elasticity implies that the product is a normal good.
The price elasticity of demand for cereal is −1.03. This means that the demand is price elastic. An elastic demand implies that a change in price will cause more than proportionate change in quantity demanded.
The price elasticity of demand for a particular magazine is −0.72. This means that the demand is price inelastic. An inelastic demand implies that a change in price will cause less than proportionate change in the quantity demanded.
