Why demand curve face by your lemonade stand perfect elastic

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Reference no: EM133918429

Problem

Imagine you're running a lemonade stand on a hot summer day. There are many other lemonade stands on your street, all selling similar drinks.

Using the concepts covered, discuss the following:

1. Perfectly Competitive Characteristics: What are three key characteristics of a perfectly competitive market, and how do they apply to your lemonade stand situation? (Think about number of buyers/sellers, product homogeneity, and price control)

2. Demand Curve and MR: Why is the demand curve faced by your lemonade stand perfectly elastic (horizontal)? How does this relate to the concept of marginal revenue (MR) for your stand? Get the instant assignment help.

3. Long-Run Equilibrium: In the long run, what factors might cause lemonade stands to enter or exit the market? What conditions would indicate long-run equilibrium for the lemonade industry on your street?

4. Industry Supply Curve: How can the individual cost curves of all the lemonade stands be combined to depict the industry supply curve? What does the shape of the long-run industry supply curve tell us about the production efficiency in this market?

5. Economic Rent vs. Producer Surplus:

a. Define economic rent. Are there any resources used in your lemonade stand that might generate economic rent?

b. How does producer surplus differ from economic rent? How can you calculate the producer surplus for your lemonade stand at the long-run equilibrium price?

c. Make sure to list all the works cited and references that you have been using to resolve this assignment.

Reference no: EM133918429

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