Please answer only # 5 & 6. Rebecca owns Louisiana Sugar Company, a manufacturer of sugar. Since there are lots of domestic manufacturers and importers of sugar and it is difficult to practice brand differentiation, the sugar industry is highly competitive. Suppose the demand for sugar increases. (1) What will be the effect on the market price and quantity of sugar in the short run and in the long run? Explain why. (2) What will happen to the economic profits of Louisiana Sugar Company in the short run and in the long run? Explain why. Now suppose that the demand for sugar increases again, In order to protect the US sugar industry, the US government forbids the import of sugar into the United States (3) What will be the effect on the market price and quantity of sugar in the short run and in the long run? Explain why (4) What will happen to the economic profits of Louisiana Sugar Company in the short run and in the long run? Explain why. (5) Are the economic profits of Louisiana Sugar Company higher or lower when entry is forbidden or when entry is allowed? Why? (6) What is the lesson illustrated in your answer to part (5)?
Please answer only # 5 & 6.
Rebecca owns Louisiana Sugar Company, a manufacturer of sugar.
Since there are lots of domestic manufacturers and importers of sugar and it is difficult to practice brand differentiation, the sugar industry is highly competitive.
Suppose the demand for sugar increases.
(1) What will be the effect on the market price and quantity of sugar in the short run and in the long run? Explain why.
(2) What will happen to the economic profits of Louisiana Sugar Company in the short run and in the long run? Explain why.
Now suppose that the demand for sugar increases again, In order to protect the US sugar industry, the US government forbids the import of sugar into the United States
(3) What will be the effect on the market price and quantity of sugar in the short run and in the long run? Explain why
(4) What will happen to the economic profits of Louisiana Sugar Company in the short run and in the long run? Explain why.
(5) Are the economic profits of Louisiana Sugar Company higher or lower when entry is forbidden or when entry is allowed? Why?
(6) What is the lesson illustrated in your answer to part (5)?
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