a. Draw Bob’s marginal cost curve.

b. Over what range of prices will Bob produce no Blu-rays in the short run?

c. Draw Bob’s individual supply curve. In your graph, plot the price range from $0 to $60 in increments of $10.

6.

a. A profit-maximizing business incurs an economic loss of $10,000 per year. Its fixed cost is $15,000 per year. Should it produce or shut down in the short run?

Should it stay in the industry or exit in the long run?

b. Suppose instead that this business has a fixed cost of $6,000 per year. Should it produce or shut down in the short run? Should it stay in the industry or exit in the long run? 7.The first sushi restaurant opens in town. Initially people are very cautious about eating tiny portions of raw fish, as this is a town where large portions of grilled meat have always been popular. Soon, however, an influential health report warns consumers against grilled meat and suggests that they increase their consumption of fish, especially raw fish. The sushi restaurant becomes very popular and its profit increases.

a. What will happen to the short-run profit of the sushi restaurant? What will happen to the number of sushi restaurants in town in the long run? Will the first sushi restaurant be able to sustain its short-run profit over the long run? Explain your answers.

b. Local steakhouses suffer from the popularity of sushi and start incurring losses.

What will happen to the number of steakhouses in town in the long run? Explain your answer.