We are evaluating a project that costs $1,140,000, has a five-year life, and has no salvage value. assume that depreciation is straight-line to zero over the life of the project. sales are projected at 87,300 units per year. price per unit is $34.40, variable cost per unit is $20.65, and fixed costs are $753,000 per year. the tax rate is 35 percent, and we require a return of 10 percent on this project. suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within ±10 percent.
calculate the best-case and worst-case npv figures. (a negative answer should be indicated by a minus sign. enter your answers in dollars, not millions of dollars, e. g. 1,234,567. do not round intermediate calculations and round your answers to 2 decimal places, e. g., 32.16.)

answer; functional fixedness;

answer; advertising;

answer: in the short-run firms will respond by raising the price of turkey.

explanation: initially the long-run equilibrium is at a price of $5 per pound of turkey and a quantity of 50 million pounds per year. now, when webmd claims that a protein found in turkey will increase your expected lifespan by 4 years. the consumers demand for turkey will increase at every price shifting the demand curve to the right from d1 to d2. while, there will be no change in the supply curve in the short-run as it is not possible for producers to adjust supply so quickly. as a result the new equilibrium will occur at a higher price and a higher quantity of turkey.

thus, in the short run firms will respond by increasing the price of turkey, selling more quantity at a higher price and earning economic profits.