9. The long-run supply curve in different cost industries Aa Aa Consider the market for milk, which is a perfectly competitive market. Suppose that tastes shift toward milk so that the market demand curve shifts rightward. Answer the following questions about the effect of this change in tastes assuming external economies are present. The following graph shows the market for annual milk consumption. Initially, the market is in a long-run equilibrium at point B. After the change in tastes and the rightward shift in demand, the market moves to point D in the short run. In the long run, the supply curve shifts from S1 to S2, which causes the market to move to point A in the long run. PRICE (Dollars per gallon) 10 5 2 0 B с D D1 A S1 S2 D2 2 8 10 QUANTITY (Thousands of gallons per year] Long-Run Supply Help Clear All

9. The long-run supply curve in different cost industries Aa Aa Consider the market for milk, which is a perfectly competitive market. Suppose that tastes shift toward milk so that the market demand curve shifts rightward. Answer the following questions about the effect of this change in tastes assuming external economies are present. The following graph shows the market for annual milk consumption. Initially, the market is in a long-run equilibrium at point B. After the change in tastes and the rightward shift in demand, the market moves to point D in the short run. In the long run, the supply curve shifts from S1 to S2, which causes the market to move to point A in the long run. PRICE (Dollars per gallon) 10 5 2 0 B с D D1 A S1 S2 D2 2 8 10 QUANTITY (Thousands of gallons per year] Long-Run Supply Help Clear All

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Market Failure Analysis

To understand Market failure, we need to first understand welfare economics. An Italian economist, Vilfredo Pareto stated that allocation of resources in an efficient manner such that an economic change, which harms no one and makes someone better off, indicates an increase in social welfare. It is also called Pareto Optimality, where resources cannot further be reallocated without harming one. This does not apply to those economic changes, which harm some and benefit others. social welfare increases if the utility of any of its members' increases and none decrease in the economy.

Question

the long run supply curve in different cost industries..... help please are my answers correct? also where do i place the long run supply curve ??

9. The long-run supply curve in different cost industries
Consider the market for milk, which is a perfectly competitive market. Suppose that tastes shift toward milk so that
the market demand curve shifts rightward. Answer the following questions about the effect of this change in tastes
assuming external economies are present.
The following graph shows the market for annual milk consumption. Initially, the market is in a long-run equilibrium
at point B. After the change in tastes and the rightward shift in demand, the market moves to point D in the
short run. In the long run, the supply curve shifts from S1 to S2, which causes the market to move to point
A in the long run.
PRICE (Dollars per gallon)
10
8
6
2
0
B
MC
D
4
D1
A
S1
S2
D2
2
6
8
10
QUANTITY (Thousands of gallons per year]
Long-Run Supply
Help
Aa Aa
Clear All

Comparing the two long-run equilibria on the graph, you can see that the milk market is an example of
an increasing-cost industry
On the preceding graph, use the purple line (diamond symbols) to plot the long-run market supply curve for milk.
(Hint: Make sure that the line passes through two of the points A, B, C, or D.)

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