Classic Products Company manufactures colonial style desks. Some of the company's data was misplaced. Use the following information to replace the lost data and document if the variance is favorable or unfavorable when required. Actual Results Flexible Budget Variances Flexible Budget Sales-Volume Variances Static Budget Units sold 490,000 490,000 448,350 Revenues $187,250 $5,000 F (10) $6,260 U Variable costs $890 U $71,260 $10,800 F $82,060 Fixed costs $36,670 $3,740 F $40,410 0 $40,410 Operating income $78,430 $70,580 $66,040 10) What is the flexible budget variance

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answer: in the short-run firms will respond by raising the price of turkey.

explanation: initially the long-run equilibrium is at a price of $5 per pound of turkey and a quantity of 50 million pounds per year. now, when webmd claims that a protein found in turkey will increase your expected lifespan by 4 years. the consumers demand for turkey will increase at every price shifting the demand curve to the right from d1 to d2. while, there will be no change in the supply curve in the short-run as it is not possible for producers to adjust supply so quickly. as a result the new equilibrium will occur at a higher price and a higher quantity of turkey.

thus, in the short run firms will respond by increasing the price of turkey, selling more quantity at a higher price and earning economic profits.