Hassle-free web is bidding to provide web hosting services for hotel lisbon. hotel lisbon pays its current provider $10,500 per year for hosting its web page, handling transactions, etc.
hassle free figures that it will need to purchase equipment worth $15,100 up front and then can spend $2,200 per year on monitoring, updates, and bandwidth to provide the service for 3 years.

if hassle free's cost of capital is 10.4%, can it bid less than $10,500 per year to provide the service and still increase its value by doing so?

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.