Consider the competitive market for titanium. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. The following diagram shows the market demand for titanium. Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 20 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 30 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 40 firms.   If there were 20 firms in this market, the short-run equilibrium price of titanium would be $_______ per pound. At that price, firms in this industry would ________    . Therefore, in the long run, firms would _______   the titanium market.   Because you know that competitive firms earn _____   economic profit in the long run, you know the long-run equilibrium price must be $______ per pound. From the graph, you can see that this means there will be  ______   firms operating in the titanium industry in long-run equilibrium.   True or False: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns positive accounting profit

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Consider the competitive market for titanium. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph.

The following diagram shows the market demand for titanium.
Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 20 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 30 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 40 firms.
 
If there were 20 firms in this market, the short-run equilibrium price of titanium would be $_______ per pound. At that price, firms in this industry would ________    . Therefore, in the long run, firms would _______   the titanium market.
 
Because you know that competitive firms earn _____   economic profit in the long run, you know the long-run equilibrium price must be $______ per pound. From the graph, you can see that this means there will be  ______   firms operating in the titanium industry in long-run equilibrium.
 
True or False: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns positive accounting profit.
100
90
80
O 70
60
50
40
ATC
30
20
AVC
10
MC O
5
10
15
20
25
30
35
40
45
50
QUANTITY (Thousands of pounds)
The following diagram shows the market demand for titanium.
Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 20 firms in the market. (Hint: You can
disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the
purple points (diamond symbol) to plot the short-run industry supply curve when there are 30 firms. Finally, use the green points (triangle symbol) to
plot the short-run industry supply curve when there are 40 firms.
100
90
Supply (20 firms)
80
70
60
Supply (30 firms)
50
40
Supply (40 firms)
Demand
30
20
10
125
250
375
500
625 750 875
1000 1125 1250
QUANTITY (Thousands of pounds)
PRICE (Dollars per pound)
COSTS (Dollars per pound)
Transcribed Image Text:100 90 80 O 70 60 50 40 ATC 30 20 AVC 10 MC O 5 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of pounds) The following diagram shows the market demand for titanium. Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 20 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 30 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 40 firms. 100 90 Supply (20 firms) 80 70 60 Supply (30 firms) 50 40 Supply (40 firms) Demand 30 20 10 125 250 375 500 625 750 875 1000 1125 1250 QUANTITY (Thousands of pounds) PRICE (Dollars per pound) COSTS (Dollars per pound)
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