1. The government passes a law that allows a substantial subsidy for every acre of land used to grow tobacco. How does this program affect the long-run supply curve for tobacco?
2. A certain brand of vacuum cleaners can be purchased from several local stores as well as from several catalogue or website sources.
a. If all sellers charge the same price for the vacuum cleaner, will they all earn zero economic profit in the long run?
b. If all sellers charge the same price and one local seller owns the building in which he does business, paying no rent, is this seller earning a positive economic profit?
c. Does the seller who pays no rent have an incentive to lower the price that he charges for the vacuum cleaner?