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, zero economic profit, or an economic loss? How much? c. Is the firm in long-run equilibrium? Why or why not?

(a) the marginal cost of producing 1000 pins is given by $2.00 X 1000=

$2000

(b) the firm is making an economic profit.

(c) The firm is not in long-run equilibrium because the cost of production is not equal to the Revenue that will be generated.

Explanation:

Marginal cost this is the cost of producing one additional goods after the initial number.

An economic profit  this is the excess profit Revenue generated from a business.

long-run equilibriuma a firm is said to be in long run equilibrium when when marginal revenue equals marginal costs,