6. Short-run equilibrium Consider a perfectly competitive market for wheat in Vancouver. There are 110 firms in the industry, each of which has the cost curves shown on the following graph: COST (Cents per bushel) PRICE (Cents per bushel) 100 90 80 70 60 50 40 30 100 20 90 10 80 The following graph shows the market demand for wheat. 0 288 282 The following graph shows the market demand for wheat. 70 30 20 10 4 0 Use the orange points (square symbol) to plot the short-run industry supply curve for the wheat industry. Specifically, place an orange point at the lowest point of the supply curve and another orange point at the highest point of the supply curve. (Note: You can disregard the portion of the supply curve that corresponds to prices where there is no output, since this is the industry supply curve. Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.) Then, place the black point (plus symbol) on the graph to indicate the short-run equilibrium price and quantity in this market. (Note: Dashed drop lines will automatically extend to both axes.) (?) 0 5 0 ATC AVC 10 15 20 25 30 35 OUTPUT (Thousands of bushels) Demand 40 At the current short-run market price, firms will given the current market price. MC 45 550 1100 1650 2200 2750 3300 3850 4400 4950 5500 QUANTITY (Thousands of bushels) 50 Supply Curve (?) + Equilibrium in the short run. In the long run, some firms will enter some firms will exit firms will neither enter nor exit the market
6. Short-run equilibrium Consider a perfectly competitive market for wheat in Vancouver. There are 110 firms in the industry, each of which has the cost curves shown on the following graph: COST (Cents per bushel) PRICE (Cents per bushel) 100 90 80 70 60 50 40 30 100 20 90 10 80 The following graph shows the market demand for wheat. 0 288 282 The following graph shows the market demand for wheat. 70 30 20 10 4 0 Use the orange points (square symbol) to plot the short-run industry supply curve for the wheat industry. Specifically, place an orange point at the lowest point of the supply curve and another orange point at the highest point of the supply curve. (Note: You can disregard the portion of the supply curve that corresponds to prices where there is no output, since this is the industry supply curve. Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.) Then, place the black point (plus symbol) on the graph to indicate the short-run equilibrium price and quantity in this market. (Note: Dashed drop lines will automatically extend to both axes.) (?) 0 5 0 ATC AVC 10 15 20 25 30 35 OUTPUT (Thousands of bushels) Demand 40 At the current short-run market price, firms will given the current market price. MC 45 550 1100 1650 2200 2750 3300 3850 4400 4950 5500 QUANTITY (Thousands of bushels) 50 Supply Curve (?) + Equilibrium in the short run. In the long run, some firms will enter some firms will exit firms will neither enter nor exit the market
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:6. Short-run equilibrium
Consider a perfectly competitive market for wheat in Vancouver. There are 110 firms in the industry, each of which has the cost curves shown on the
following graph:
COST (Cents per bushel)
PRICE (Cents per bushel)
100
90
80
70
60
50
40
30
100
20
90
10
80
0
70
The following graph shows the market demand for wheat.
The following graph shows the market demand for wheat.
60
50
40
30
20
Use the orange points (square symbol) to plot the short-run industry supply curve for the wheat industry. Specifically, place an orange point at the
lowest point of the supply curve and another orange point at the highest point of the supply curve. (Note: You can disregard the portion of the supply
curve that corresponds to prices where there is no output, since this is the industry supply curve. Plot your points in the order in which you would like
them connected. Line segments will connect the points automatically.) Then, place the black point (plus symbol) on the graph to indicate the short-run
equilibrium price and quantity in this market. (Note: Dashed drop lines will automatically extend to both axes.)
10
0
ATC
☐
AVC
0 5 10 15 20 25 30 35
OUTPUT (Thousands of bushels)
0
Demand
40
At the current short-run market price, firms will
given the current market price.
MC
45 50
550 1100 1650 2200 2750 3300 3850 4400 4950 5500
QUANTITY (Thousands of bushels)
Supply Curve
+
Equilibrium
(?
(?)
in the short run. In the long run,
some firms will enter
some firms will exit
firms will neither enter nor exit
▼ the market
Transcribed Image Text:0
0
550 1100 1650 2200 2750 3300 3850 4400 4950 5500
QUANTITY (Thousands of bus
At the current short-run market price, firms will
given the current market price.
produce
shut down
in the short run. In the long run,
the market
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