The figure above shows the situation facing Smart Digit, Inc, a firm in monopolistic competition that produces calculators. The firm's markup is ________ per calculator

How will consumers generally react to an increase in the price of butter?

a. They will purchase a larger quantity of butter. b. They will substitute other goods like margarine for the more expensive butter. c. They will reduce their purchases of substitute goods like margarine. d. They will continue purchasing the same quantity of butter at the higher price.

Suppose the government imposes a tax on cheese. The deadweight loss from this tax will likely be greater in the

a. first year after it is imposed than in the eighth year after it is imposed because demand and supply will be more elastic in the first year than in the eighth year. b. first year after it is imposed than in the eighth year after it is imposed because demand and supply will be less elastic in the first year than in the eighth year. c. eighth year after it is imposed than in the first year after it is imposed because demand and supply will be more elastic in the first year than in the eighth year. d. eighth year after it is imposed than in the first year after it is imposed because demand and supply will be less elastic in the first year than in the eighth year.