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First name Last name Instructor’s Name Course Number Date Answers to the questions Recent demands and supply formula Demand formula, quantity demanded in the market (QD), P= a-cQ, whereas supply formula (QS), P=tQ. On entry, the firms can opt to price their products at a lower price compared to their rivals. Since there is perfect knowledge in this market structure, consumers, being rational will buy from the cheapest supplier (Samuelson & Marks 216). This strategy will enable them to penetrate the market. The firm will make little profit since it will seek to maximize the units sold since its charges lower prices. The firm will also need to consider its total cost when pricing. However, this strategy will be short lived since other firms in the market will lower their prices as well. Lower average cost The firm will need to maintain its average costs at the minimum to make a profit. Average cost is given by the total costs incurred in the production divided by the units produced. Maximize Total Revenue Total revenue is given by the average revenue multiplied by the price. Therefore, the firm will be required to maximize the units sold since it cannot raise the price. Graph what will happen to the market and the profits of the business The Fetchy Trends Company expects to increase its sales revenue after expansion since they will now sell many units. The company expects to increase profits since the total costs are expected to remain low. However, the situation is expected to change between 6-12 months since many firms will enter the market. The supply curve will shift to the right resulting in the reduction of the price from P1 to P2. Consequently,

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