6. Deriving the short-run supply curveConsider the competitive market for sports jackets. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves for a typical firm in the industry. Suppose there are 7 firms in this industry, each of which has the cost curves previously shown.On the following graph, use the orange paints (square symbal) to plat points alang the portion of the industry's short-nun supply curve thatcorrespands to prices where there is positive output. (Note: You are given more points to plot than you need.) Then, place the black paint (plussymbol) on the graph to indicate the shart-run equNbrium price and quantity in this market.Note: Dashed drop lines will automatically extend to both axes.10090Industry's Short-Run SupplyDemand70Equilbrium40302010D2570105 140 1TS 21024515QUANTITY (Thousands of jackets)At the current short-run market price, firms willin the short run. In the long run,(jaoel ad soni aHA 100EDTDATC504020AVC10510152030354045QUANTITY (Thousands of jackets)For each price in the following table, use the graph to determine the number of jackets this fArm would produce in arder to maximize its prafit. Assumethat when the price is exactly equal to the average varlable cost, the firm is indiferent between producing zero jackets and the profit-maximizingquantity. Also, Indicate whether the firm will produce, shut down, or be indiferent between the two in the short run. Lastly, determine whether it willmake a profit, suffer a loss, or break even at each price.PriceQuantity(Dollars per jacket)(Jackets)Produce or Shut Down?Profit or Loss?102032405060On the following graph, use the orange paints (square symbol) to plat points along the portion of the firm's shart-run supply curve that comespondsto prices where there is positive output. (Note: You are given mare points to plot than you need.)100Firm's Short-Run Supply70ED504D3020101015 202530254045QUANTITY (Thousands of jackets)(iel Jad sEon) a

A competitive market is one in which numerous producers compete with one another in the hopes of…

6. Deriving the short-run supply curve Consider the competitive market for sports jackets. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves for a typical firm in the industry.

6. Deriving the short-run supply curve Consider the competitive market for sports jackets. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves for a typical firm in the industry.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter23: Profit Maximization

Section: Chapter Questions

Problem 1E

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6. Deriving the short-run supply curve

Consider the competitive market for sports jackets. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves for a typical firm in the industry.

Suppose there are 7 firms in this industry, each of which has the cost curves previously shown.
On the following graph, use the orange paints (square symbal) to plat points alang the portion of the industry's short-nun supply curve that
correspands to prices where there is positive output. (Note: You are given more points to plot than you need.) Then, place the black paint (plus
symbol) on the graph to indicate the shart-run equNbrium price and quantity in this market.
Note: Dashed drop lines will automatically extend to both axes.
100
90
Industry's Short-Run Supply
Demand
70
Equilbrium
40
30
20
10
D
25
70
105 140 1TS 210
245
15
QUANTITY (Thousands of jackets)
At the current short-run market price, firms will
in the short run. In the long run,
(jaoel ad soni aHA

100
ED
TD
ATC
50
40
20
AVC
10
5
10
15
20
30
35
40
45
QUANTITY (Thousands of jackets)
For each price in the following table, use the graph to determine the number of jackets this fArm would produce in arder to maximize its prafit. Assume
that when the price is exactly equal to the average varlable cost, the firm is indiferent between producing zero jackets and the profit-maximizing
quantity. Also, Indicate whether the firm will produce, shut down, or be indiferent between the two in the short run. Lastly, determine whether it will
make a profit, suffer a loss, or break even at each price.
Price
Quantity
(Dollars per jacket)
(Jackets)
Produce or Shut Down?
Profit or Loss?
10
20
32
40
50
60
On the following graph, use the orange paints (square symbol) to plat points along the portion of the firm's shart-run supply curve that comesponds
to prices where there is positive output. (Note: You are given mare points to plot than you need.)
100
Firm's Short-Run Supply
70
ED
50
4D
30
20
10
10
15 20
25
30
25
40
45
QUANTITY (Thousands of jackets)
(iel Jad sEon) a

Definition Definition Total cost of producing a certain quantity of a good, divided by the quantity produced. It is the sum of all costs (fixed and variable) required to produce one unit of output.

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