at, if anything, will happen to the supply curve, market price, the optimal output of an individual firm, the total number of firms in the industry, and the individual firm’s profit? Assume the natural gas industry is still living with the short-run supply disruption. Then unusually warm weather causes demand for natural gas to decrease unexpectedly. Analyze the impact of this reduction in demand in for natural gas.
Consider the equilibrium depicted as your final short-run equilibrium (SRE) in Question 3. Is your
Assume the natural gas industry is still living with the short-run supply disruption. Then unusually warm weather causes demand for natural gas to decrease unexpectedly. Analyze the impact of this reduction in demand in for natural gas.
- For this analysis, assume the natural gas industry is
perfectly competitive , demand is downward sloping, supply is upward sloping, and production technology results in traditional U-shapedATC andAVC curves. - Finally, for questions 1, 2, 3, and 4, market price is always greater than the minimum of the AVC curve.
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