Suppose that Roots' marginal cost of a jacket is a constant

$100.00

and the total fixed cost at one of its stores is

$2,000

a day.

This store sells

15

jackets a day, which is its profit-maximizing number of jackets.

Then the stores nearby start to advertise their jackets. The Roots store now spends

$2,000

a day advertising its jackets, and its profit-maximizing number of jackets sold jumps to

45

a day.

What is this store's average total cost of a jacket sold before the advertising begins and after the advertising begins.

>>> Answer to 2 decimal places.

Can you say what happens to the price of a Roots jacket, Roots' markup, and Roots' economic profit?

Before the advertising begins, the average total cost of a jacket sold in this store is

$233.33233.33.

After the advertising begins, the average total cost of a jacket sold in this store is

$188.89188.89.

If the nearby firms' advertising decreases the demand for Roots' jackets and makes the demand more elastic, the price of a Roots' jacket ______.

If Roots' advertising increases the demand for Roots' jackets and makes the demand less elastic, the price of a Roots' jacket _____.

A.

falls; rises

B.

rises; falls

C.

rises; rises

D.

falls; falls

If the price falls, Roots' markup

falls

.

If the price rises, Roots' markup

rises

.

In the long run, Roots' economic profit is

$enter your response here.