21. Use the accompanying graph, which shows the marginal cost and average total cost curves for the shoe store Zapateria, a perfectly competitive firm. (LO13-4)

a. How many pairs of shoes will Zapateria produce if the market price of shoes is $70 a pair?

b. What is the total profit Zapateria will earn if the market price of shoes is $70 a pair?

c. Should Zapateria expect more shoe stores to enter this market? Why or why not?

d. What is the long-run equilibrium price in the shoe market assuming it is a constant-cost industry?

Transcribed Image Text:

Price per pair $100 90 80 MC 70 ATC 60 50 40 30 20 10 0 100 200 300 400 500 600 Pairs of shoes