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Suppose the bobby pin industry is perfectly competitive. The price of a packet of bobby pins is $2.00. Pins and Needles, Inc. is a firm in this industry and is producing 1,000 packets of bobby pins per day at the point where the MC = MR. The average cost of production at this output level is $1.50 per packet.
a) What is the marginal cost of the 1,000th packet?
b) Is this firm making an economic profit, a normal profit, or an economic loss? How much?
c) Is the firm in long-run equilibrium? Why or why not?
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