Assume you are the manager of a small South African firm which sells nails, identical to those supplied by many other firms. You are concerned about two eventualities: • That the overall market supply of nails will decrease by 2 percent due to foreign producers’ exit • That the overall market demand for nails will increase by 2 percent due to a growing economy. Use this information to answer the following questions a)Identify and justify the firm’s market structure. b) With the aid of a diagram, illustrate and explain the firm’s long-run equilibrium position.
Assume you are the manager of a small South African firm which sells nails, identical to those supplied by many other firms. You are concerned about two eventualities: • That the overall market supply of nails will decrease by 2 percent due to foreign producers’ exit • That the overall market demand for nails will increase by 2 percent due to a growing economy. Use this information to answer the following questions a)Identify and justify the firm’s market structure. b) With the aid of a diagram, illustrate and explain the firm’s long-run equilibrium position.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Assume you are the manager of a small South African firm which sells nails,
identical to those supplied by many other firms. You are concerned about two
eventualities:
• That the overall market supply of nails will decrease by 2 percent due to
foreign producers’ exit
• That the overall market
a growing economy.
Use this information to answer the following questions
a)Identify and justify the firm’s market structure.
b) With the aid of a diagram, illustrate and explain the firm’s long-run
equilibrium position.
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