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Assume that all firms in this industry have identical cost curves, and that the market is perfectly competitive. 30 25 20 15 10 5 0 0 2 O о مال о Entire Market O --- 4 6 Q (thousands of gallons/week) Multiple Choice S1 8 10 12 S2 $1,000 $1,500 $2,000 30 25 20 10 5 0 Representative Firm 0 1 If S3 is the market supply curve, then each firm in this market will earn an economic loss of 2 3 4 MC ATC 5 AVC 6 Q (hundreds of gallons/week) per week.

Assume that all firms in this industry have identical cost curves, and that the market is perfectly competitive. 30 25 20 15 10 5 0 0 2 O о مال о Entire Market O --- 4 6 Q (thousands of gallons/week) Multiple Choice S1 8 10 12 S2 $1,000 $1,500 $2,000 30 25 20 10 5 0 Representative Firm 0 1 If S3 is the market supply curve, then each firm in this market will earn an economic loss of 2 3 4 MC ATC 5 AVC 6 Q (hundreds of gallons/week) per week.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Assume that all firms in this industry have identical cost curves, and that the market is perfectly competitive. **Graphs Explanation:** 1. **Entire Market Graph** - **Axes:** The x-axis represents quantity (Q) in thousands of gallons per week, and the y-axis represents price in dollars per gallon ($/gallon). - **Lines:** - S1, S2, and S3 are supply curves. - D is the demand curve. - **Points:** At the intersection of the supply and demand curves (market equilibrium), the quantity and price are determined. 2. **Representative Firm Graph** - **Axes:** The x-axis represents quantity (Q) in hundreds of gallons per week, and the y-axis represents price in dollars per gallon ($/gallon). - **Curves:** - MC is the marginal cost curve. - ATC is the average total cost curve. - AVC is the average variable cost curve. - **Points:** The intersection of MC and ATC indicates the lowest cost and optimal production point. **Question:** If S3 is the market supply curve, then each firm in this market will earn an economic loss of ______ per week. **Multiple Choice:** - ○ $1,000 - ○ $1,500 - ○ $2,000
Transcribed Image Text:Assume that all firms in this industry have identical cost curves, and that the market is perfectly competitive. **Graphs Explanation:** 1. **Entire Market Graph** - **Axes:** The x-axis represents quantity (Q) in thousands of gallons per week, and the y-axis represents price in dollars per gallon ($/gallon). - **Lines:** - S1, S2, and S3 are supply curves. - D is the demand curve. - **Points:** At the intersection of the supply and demand curves (market equilibrium), the quantity and price are determined. 2. **Representative Firm Graph** - **Axes:** The x-axis represents quantity (Q) in hundreds of gallons per week, and the y-axis represents price in dollars per gallon ($/gallon). - **Curves:** - MC is the marginal cost curve. - ATC is the average total cost curve. - AVC is the average variable cost curve. - **Points:** The intersection of MC and ATC indicates the lowest cost and optimal production point. **Question:** If S3 is the market supply curve, then each firm in this market will earn an economic loss of ______ per week. **Multiple Choice:** - ○ $1,000 - ○ $1,500 - ○ $2,000
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