25-2. Consider the diagram on the facing page depicting
the demand and cost conditions faced by a monopolistically
competitive firm. (See page 559.)
a. What are the total revenues, total costs, and
economic profits experienced by this firm?

b. Is this firm more likely in short- or long-run
equilibrium? Explain.

25-6. Calculate total average costs for the bookstore in
Problem 25-5. Illustrate the store’s short-run equilibrium
by plotting demand, marginal revenue,
average total costs, and marginal costs. What is its
total profit? (See page 560.)

25-8. It is a typical Christmas electronics shopping season,
and makers of flat-panel TVs are marketing the latest
available models through their own Web sites as
well as via retailers such as Best Buy and Walmart.
Each manufacturer offers its own unique versions of
flat-panel TVs in differing arrays of shapes and sizes.
As usual, each is hoping to maintain a stream of
economic profits earned since it first introduced
these most recent models late last year or perhaps
just a few months before Christmas. Nevertheless, as
sales figures arrive at the headquarters of companies
such as Dell, Samsung, Sharp, and Sony, it is clear
that most of the companies will end up earning only
a normal rate of return this year. (See page 560.)
a. How can makers of flat-panel TVs earn economic
profits during the first few months after
the introduction of new models?

b. What economic forces result in the dissipation
of economic profits earned by manufacturers of
flat-panel TVs?

25-12. Categorize each of the following as an experience
good, a search good, or a credence good or service,
and justify your answer. (See page 563.)
a. Services of a carpet cleaning company

b. A new cancer treatment

c. Athletic socks

d. A silk necktie

25-16. A firm that sells e-books—books in digital form
downloadable from the Internet—sells all e-books
relating to do-it-yourself topics (home plumbing,
gardening, and the like) at the same price. At present,
the company can earn a maximum annual profit of
$25,000 when it sells 10,000 copies within a year’s
time. The firm incurs a 50-cent expense each time a
consumer downloads a copy, but the company must
spend $100,000 per year developing new editions of
the e-books. The company has determined that it
would earn zero economic profits if price were equal
to average total cost, and in this case it could sell
20,000 copies. Under marginal cost pricing, it could
sell 100,000 copies. (See page 565.)
a. In the short run, what is the profit-maximizing
price of e-books relating to do-it-yourself topics?

b. At the profit-maximizing quantity, what is the
average total cost of producing e-books?

26-2. The table below shows recent worldwide market
shares of producers of inkjet printers. (See page
576.)
Firm
Brother
Canon
Dell
Epson
Hewlett-Packard
Lexmark
Samsung
Other

Share of Worldwide Market Sales
3%
17