Question: Sara is a dot.com entrepreneur who has established a Web site at which people can design and buy sweatshirts. Sara pays $1,000 a week for her Web server and Internet connection. The sweatshirts that her customers design are made to order by another firm, and Sara pays this firm $20 a sweatshirt. Sara has no other costs. The table sets out the demand schedule for Sara's sweatshirts.

            Price                               Quantity demanded
(dollars per sweatshirt)                (sweatshirt per week)

               0                                          100

              20                                           80

              40                                           60

              60                                           40

              80                                           20

             100                                            0

a. Do you expect other firms to enter the Web sweatshirt business and compete with Sara?

b. What happens to the demand for Sara's sweatshirts in the long run? What happens to Sara's economic profit in the long run?