According to the graph, the milk market is an example of industry. True or False: The average cost at the cost-minimizing level of output is lower for the new marginal firm than it was for the marginal firm before the change in demand. False O True
According to the graph, the milk market is an example of industry. True or False: The average cost at the cost-minimizing level of output is lower for the new marginal firm than it was for the marginal firm before the change in demand. False O True
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter3: Demand And Supply
Section: Chapter Questions
Problem 55P: Table 3.9 illustrates the markets demand and supply for cheddar cheese. Graph the data and find the...
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Transcribed Image Text:6. The long-run supply curve in different cost industries
Suppose that milk is sold in a perfectly competitive market and that tastes shift toward milk so that demand shifts
rightward from D1 to D2. Answer the following questions about the consequences of this change in tastes.
PRICE (Dollars per gallon)
The following graph shows the market for annual milk consumption, which is initially in long-run equilibrium at point
B. After the change in tastes and the rightward shift in demand, the market moves to point
in the short run
and then to point
in the long run.
10
8
6
4
2
0
2
B
4
C
D
D1
A
S1
S2
D2
6
8
10
QUANTITY (Millions of gallons per year)
Long-Run Supply
Aa Aa
Help
Clear All
JE
Transcribed Image Text:On the preceding graph, use the purple line (diamond symbols) to plot the long-run market supply curve for milk,
making sure that it goes through two of the points A, B, C, or D.
According to the graph, the milk market is an example of
industry.
True or False: The average cost at the cost-minimizing level of output is lower for the new marginal firm than it was
for the marginal firm before the change in demand.
False
O True
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