In August 2008, Ethan Nicholas Developed the IShoot Application for the Apple

question 9

Multiple Choice

In August 2008, Ethan Nicholas developed the iShoot application for the apple iPhone 3G, and within five months had earned $800,000 from this program. By May 2009, Nicholas had dropped the price from $4.99 to $1.99 in an attempt to maintain sales. This example indicates that in a competitive market,

• A) earning an economic profit in the long run is extremely easy.
• B) earning an economic profit in the long run is extremely difficult.
• C) it is impossible to earn an economic profit in either the short run or the long run.
• D) economic profits are only earned in the long run.

Understand the implications of changes in income on demand for normal goods.

Evaluate the impact of supply and demand equations on market equilibrium prices and quantities.

Comprehend the role of substitutes in market dynamics and how changes in the supply of one good can affect the price of substitute goods.

Predict the outcomes in a market when both supply and demand simultaneously increase or decrease.