General Information:This question has 10 blank spaces.22 points in total.

Instructions:Report all monetary values up to 2 decimal places, and all quantity values to 4 decimal places where applicable.Do not use any commas.Where applicable, use only the words/phrases provided inred

Crunchy Cashewsis a retail firm located in a southern state which is popular among tourists.It is one of many firms participating in the highly competitive market for assorted nuts (shelled and unshelled).

Currently the market is in equilibrium and the market price is $25.All the firms in the market (and potential entrants have the same cost structure, and the current market quantity is 42,000 pounds per month.

Crunchy Cashewsfaces a monthly cost of $4,000 for its machinery and equipment.In addition, the monthly cost of labor and materials used in production is described by the equations: AVC = 0.05q + 1 and MC = 0.1q + 1.

1.What isCrunchy Cashews'current profit-maximizing quantity?(3 points)

Complete the sentence by entering a numerical value (0.00 is acceptable) in the blank space provided

Crunchy Cashews'current profit maximizing quantity is____pounds per month.

2.What isCrunchy Cashews' profit at the current profit-maximizing quantity?(5 points)

Complete the sentence by entering a numerical value (0.00 is acceptable) in the blank space provided

At the current profit-maximizing quantity,Crunchy Cashews'profit is$____per month.

3.How many firms are currently in the market?(2 points)

Complete the sentence by entering a numerical value (0.00 is acceptable) in the blank space provided:

Currently, there are____firms in the market.

Now consider that technology improvement led to an increase in the supply of dried fruit, a complementary consumption good.The price and quantity of dried fruit traded changes, and this impacts the competitive market for assorted nuts.

The market for assorted nuts adjusts in the short run, and now the market priceCrunchy Cashewsfaces is either $23, $25, or $27.

4.Given the expected market adjustments in the short run, which is more likely the new current market price?(3 points)

Complete the sentence by entering a numerical value (0.00 is acceptable) in the blank space provided

As a result of the market shocks and expected short-run adjustments, the current market price is more likely to be$_____.

5.Given the expected market adjustments in the short run, what is the current market quantity?(4 points)

Complete the sentence by entering a numerical value (0.00 is acceptable) in the blank space provided

As a result of the market shocks and expected short-run adjustments, the current market quantity is ______per month.

Consider that there are no further external shocks to the market for assorted nuts andCrunchy Cashewsremains in the market in the long run.

6.In comparison to the initial condition, what long-run adjustments should be anticipated as the market moves towards the long-run equilibrium?(5 points)

Complete the sentence by entering one of the following phrases in the blank space provided:

in each blank space:decrease|either decrease or increase (more information is needed to provide a conclusion)|increase|remain the same

As the market adjusts in the long run, one would expect that the number of firms in the market will_____and the market quantity will_____.Crunchy Cashews'profit-maximizing quantity will_____, the price it charges will______, and its monthly profit will.