a. Do you expect other firms to enter the Web sweatshirt business and compete with Sara?

b. What happens to the demand for Sara’s sweatshirts in the long run? What happens to Sara’s economic profit in the long run?

Web site at which people can design and buy sweatshirts.
Sara pays $1,000 a week for her Web server and Internet connection. The sweatshirts that her customers design are made to order by another firm, and Sara pays this firm $20 a sweatshirt. Sara has no other costs. The table sets out the demand schedule for Sara’s sweatshirts.

Transcribed Image Text:

Price (dollars per sweatshirt) 0 20 40 60 80 100 Quantity demanded (sweatshirts per week) 100 80 60 40 20 0