10. Suppose that the European Union textile industry is competitive, and there is no international trade in textiles. In long-run equilibrium, the price per unit of cloth is €30. a. Describe the equilibrium using graphs for the entire market and for an individual producer. Now suppose that textile producers in non-EU coun- tries are willing to sell large quantities of cloth in the EU for only €25 per unit. b. Assuming that EU textile producers have large fixed costs, what is the short-run effect of these imports on the quantity produced by an individual producer? What is the short-run effect on profits? Illustrate YOur anSwer with a granh
10. Suppose that the European Union textile industry is competitive, and there is no international trade in textiles. In long-run equilibrium, the price per unit of cloth is €30. a. Describe the equilibrium using graphs for the entire market and for an individual producer. Now suppose that textile producers in non-EU coun- tries are willing to sell large quantities of cloth in the EU for only €25 per unit. b. Assuming that EU textile producers have large fixed costs, what is the short-run effect of these imports on the quantity produced by an individual producer? What is the short-run effect on profits? Illustrate YOur anSwer with a granh
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
![10. Suppose that the European Union textile industry is
competitive, and there is no international trade in textiles.
In long-run equilibrium, the price per unit of cloth is €30.
a. Describe the equilibrium using graphs for the entire
market and for an individual producer.
Now suppose that textile producers in non-EU coun-
tries are willing to sell large quantities of cloth in the
EU for only €25 per unit.
b. Assuming that EU textile producers have large fixed
costs, what is the short-run effect of these imports on
the quantity produced by an individual producer?
What is the short-run effect on profits? llustrate
your answer with a graph.
c. What is the long-run effect on the number of EU firms
in the industry?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F39ce97f0-bbb2-4e41-8690-06d056a919cf%2F55e5f2db-0f55-4598-b147-4c1417500d00%2Fe614m5e_processed.jpeg&w=3840&q=75)
Transcribed Image Text:10. Suppose that the European Union textile industry is
competitive, and there is no international trade in textiles.
In long-run equilibrium, the price per unit of cloth is €30.
a. Describe the equilibrium using graphs for the entire
market and for an individual producer.
Now suppose that textile producers in non-EU coun-
tries are willing to sell large quantities of cloth in the
EU for only €25 per unit.
b. Assuming that EU textile producers have large fixed
costs, what is the short-run effect of these imports on
the quantity produced by an individual producer?
What is the short-run effect on profits? llustrate
your answer with a graph.
c. What is the long-run effect on the number of EU firms
in the industry?
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