Problem

Natti is a dot.com entrepreneur who has established a Web site at which people can design and buy awesome sunglasses. Natti pays $4,000 a month for her Web server and Internet connection. The sunglasses that her customers design are made to order by another firm, and Natti pays this firm $50 a pair. Natti has no other costs. Table 1 shows the demand schedule for Natti's sunglasses.

1. Calculate Natti's profit-maximizing output, price, and economic profit.

2. Do you expect other firms to enter the market and compete with Natti?

3. What happens to the demand for Natti's sunglasses?