Lin's fortune cookies are identical to the fortune cookies made by dozens of other firms and there is free entry in the fortune cookie market. Buyers and sellers are well informed about prices.
a. In what type of market does Lin's operate?
b. What determines the price of fortune cookies?
c. What determines Lin's marginal revenue of fortune cookies?
d. If fortune cookies sell for $10 a box and Lin offers his cookies for sale at $10.50 a box, how many boxes does he sell?
e. If fortune cookies sell for $10 a box and Lin offers his cookies for sale at $9.50 a box, how many boxes does he sell?
f. What is the elasticity of demand for Lin's fortune cookies and how does it differ from the elasticity of the market demand for fortune cookies?