Consider that An Cy is a retall firm at produces and sells fashion ccessories Inciuding crochete neted bracelets. The market price Icelets An Cy is one of many firms participating in a highly competitive hational market crocheted bracelet is $18.20 and the market is in equilibrium. Firms in the market and potential entrants have the same cost structure, and the current market quantity is 48,280 bracelets. At Ah Cy, the cost of labor and materials used in production is described by the equations: MC = 4 + 0.05g and AVC = 4 + 0.025q. In addition to these costs, the firm faces a cost of $4,840 for its machinery and equipment. (NOT FOR SALE • DO NOT COPY) Question 7 of 8) Now consider that higher input prices led to a decrease in the supply of leather bracelets, a substitute consumption good. In the market for leather bracelets, the market price, and quantity impacts the competitive market for crocheted bracelets. As a result of this shock, the market for crocheted bracelets adjusts in the short run. (NOT FOR SALE • DO NOT COPY) leather bracelets traded changes, and this In comparison to the initial condition, what long-run adjustments should be anticipated as the market moves towards the long-run equilibrium? Compared to its initial outcome, as the market adjusts in the long run one would expect that Ah Cy's profit-maximizing quantity will v the price the firm charges will v, and its aconomic v will
Consider that An Cy is a retall firm at produces and sells fashion ccessories Inciuding crochete neted bracelets. The market price Icelets An Cy is one of many firms participating in a highly competitive hational market crocheted bracelet is $18.20 and the market is in equilibrium. Firms in the market and potential entrants have the same cost structure, and the current market quantity is 48,280 bracelets. At Ah Cy, the cost of labor and materials used in production is described by the equations: MC = 4 + 0.05g and AVC = 4 + 0.025q. In addition to these costs, the firm faces a cost of $4,840 for its machinery and equipment. (NOT FOR SALE • DO NOT COPY) Question 7 of 8) Now consider that higher input prices led to a decrease in the supply of leather bracelets, a substitute consumption good. In the market for leather bracelets, the market price, and quantity impacts the competitive market for crocheted bracelets. As a result of this shock, the market for crocheted bracelets adjusts in the short run. (NOT FOR SALE • DO NOT COPY) leather bracelets traded changes, and this In comparison to the initial condition, what long-run adjustments should be anticipated as the market moves towards the long-run equilibrium? Compared to its initial outcome, as the market adjusts in the long run one would expect that Ah Cy's profit-maximizing quantity will v the price the firm charges will v, and its aconomic v will
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Consider that Ah Cy is a retail firm that produces and sells fashion accessories including crocheted bracelets. Ah Cy is one of many firms participating in a highly competitive national market for crocheted bracelets. The market price for
crocheted bracelet is $18.20 and the market is in equilibrium. Firms in the market and potential entrants have the same cost structure, and the current market quantity is 48,280 bracelets. At Ah Cy, the cost of labor and materials used in
production is described by the equations: MC = 4 + 0.05g and AVC = 4 + 0.025q. In addition to these costs, the firm faces a cost of $4,840 for its machinery and equipment. (NOT FOR SALE • DO NOT COPY)
(Question 7 of 8)
Now consider that higher input prices led to a decrease in the supply of leather bracelets, a substitute consumption good. In the market for leather bracelets, the market price, and quantity of leather bracelets traded changes, and this
impacts the competitive market for crocheted bracelets. As a result of this shock, the market for crocheted bracelets adjusts in the short run. (NOT FOR SALE • DO NOT COPY)
In comparison to the initial condition, what long-run adjustments should be anticipated as the market moves towards the long-run equilibrium?
Compared to its initial outcome, as the market adjusts in the long run one would expect that Ah Cy's profit-maximizing quantity will
v, the price the firm charges will
v, and its
economic
v will
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