Consider a newsvendor problem where demand is expected to be normally distributed with a mean of 1,000 units and a standard deviation of 800 units. this is a high-margin monopoly item, with a variable production cost of $2 per unit and a sales price of $100 per unit. in addition, the producer must pay $1 to discard any unsold units. how many units should be produced?

i would prefer to go with the news article for nate, its recent and updated and stores a lot of information

answer; sensory adaptation;

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.