Discuss the shape of the long-run supply curve in a perfectly competitive market. The long-run supply curve is A. an upward-sloping line equal to the sum of the portion of each firm's marginal cost curve that is above minimum average variable cost. B. a horizontal line equal to the minimum point on the typical firm's average total cost curve. C. an upward-sloping line equal to the sum of each firm's marginal cost curve. OD. a horizontal line equal to the minimum point on the typical firm's average variable cost curve. E. an upward-sloping line equal to the sum of each firm's supply curve. Suppose that the perfectly competitive market illustrated in the graph to the right is initially in long-run equilibrium (at P₁) and then there is a permanent decrease in the demand for the product (to D₂). Show how the market adjusts in the long run. 1.) Use the line drawing tool to add either a new demand curve or a new supply curve showing the market in long-run equilibrium. Properly label this line. 2.) Use the point drawing tool to identify the new long-run market equilibrium price and quantity. Properly label this point. Carefully follow the instructions above, and only draw the required objects.

Discuss the shape of the long-run supply curve in a perfectly competitive market. The long-run supply curve is A. an upward-sloping line equal to the sum of the portion of each firm's marginal cost curve that is above minimum average variable cost. B. a horizontal line equal to the minimum point on the typical firm's average total cost curve. C. an upward-sloping line equal to the sum of each firm's marginal cost curve. OD. a horizontal line equal to the minimum point on the typical firm's average variable cost curve. E. an upward-sloping line equal to the sum of each firm's supply curve. Suppose that the perfectly competitive market illustrated in the graph to the right is initially in long-run equilibrium (at P₁) and then there is a permanent decrease in the demand for the product (to D₂). Show how the market adjusts in the long run. 1.) Use the line drawing tool to add either a new demand curve or a new supply curve showing the market in long-run equilibrium. Properly label this line. 2.) Use the point drawing tool to identify the new long-run market equilibrium price and quantity. Properly label this point. Carefully follow the instructions above, and only draw the required objects.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Which of the following best describes the short-run supply curve for an individual perfectly competitive firm? Select one: a. It is the vertical axis at prices less than minimum average variable cost and is the firm's marginal cost curve at prices above minimum average variable cost. Ob. It is the upward-sloping part of the firm's marginal cost curve. O c. It is the firm's marginal cost curve. Od. It is the vertical axis at prices less than minimum average total cost and is the firm's marginal cost curve at prices above minimum average total cost.
The following problem traces the relationship between firm decisions, market supply, and market equilibrium in a perfectly competitive market. a. Complete the following table for a single firm in the short run. Using the information in the table, fill in the following supply schedule for this individual firm under perfect competition and indicate profit (positive or negative) at each output level. (Hint: At each hypothetical price, what is the MR of producing 1 more unit of output? Combine this with the MC of another unit to figure out the quantity supplied.)
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