Jess, an aspiring small business owner, is looking at starting up a home business growing organic kale, turning it into Kale Chips, and selling it at the local market. The market for Kale Chips is served by many small suppliers, however, she believes the current suppliers may be earning excess profits. She calculates the cost structure of her business, which she believes to be identical to all the other Kale Chip suppliers operating in her area. Unfortunately, her housemate has spilt red wine all over the worksheet and only the following could be recovered: (8 Marks)

Quantity FC ($) AVC ($) ATC MC

0

1 2

2 2

3 2.66 6 4

4 10 6

5 4.4 8

6 7 10

Suppose the current price of Kale Chips is $8, answer the following:

(a) Should Jess enter into the Kale Chip industry? Why or why not? (2 Marks)

(b) What will be the long-run competitive equilibrium price for Kale Chips? (2 Marks)

(c) Could Jess earn a profit at this long-run price? (2 Marks)