3.) Ball point pens are produced by a constant-cost industry made up of identicalfirms with standard U-shaped average cost curves. Assume the market is currently in along-run equilibrium. Using one or more diagrams, draw the long-run supply curve forball point pens and explain what will happen in the short and long run if the demandfor ball point pens falls.

Answered: 3. ) Ball point pens are produced by a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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3.
) Ball point pens are produced by a constant-cost industry made up of identical
firms with standard U-shaped average cost curves. Assume the market is currently in a
long-run equilibrium. Using one or more diagrams, draw the long-run supply curve for
ball point pens and explain what will happen in the short and long run if the demand
for ball point pens falls.

Expert Solution

Introduction

Competition between firms generally occurs when the market consisted of multiple firms, The perfectly competitive market is one such example of a market structure in which there exist many firms selling homogenous goods and services to many buyers. The producers in the perfectly competitive market are the price takers as they go with the prices prevailing in the market.

Perfectly competitive: It is a market structure in which there operates a large number of firms selling homogenous products to many buyers. The producer in a perfectly competitive market is the price taker as they have to follow the prices that are already prevailing in the market.

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