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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Question 9

Consider the file Short Run & Long Run and ignore everything that happened in the previous two questions. Start from the beginning. Assume that this is a constant-cost industry. Suppose that the demand for this product increases by 1,200 units and stays at this new higher level for ever. Then, in the short run, the equilibrium price of the product will equal “?” dollars per unit, the equilibrium quantity “?” units, and there will be “?”firms in the industry each making an economic profit of “?” dollars.

Then, in the long run, the equilibrium price of the product will equal “?” dollars per unit, the equilibrium quantity “?” units, and there will be “?” firms in the industry each making an economic profit of “?” dollars.

Question 10

Consider the file Short Run & Long Run and ignore everything that happened in the previous two questions. Start from the beginning. Assume that this is an increasing-cost industry. Suppose that the demand for this product increases by 1,200 units and stays at this higher level for ever. In the long run, as new firms enter the industry, the demand for factors of production increases causing increases in wages and other input costs. This, in turn, causes the average cost of production to increase by 8 dollars (The ATC curve shifts up vertically by $8). Then, in the long run, the equilibrium price of the product will equal “?” dollars per unit, the equilibrium quantity “?” units, and there will be “?” firms in the industry each making an economic profit of “?” dollars.

Question 11

Consider the file Short Run & Long Run and ignore everything that happened in the previous two questions. Start from the beginning. Assume that this is a decreasing-cost industry. Suppose that the demand for this product increases by 1,200 units and stays at this higher level for ever. In the long run, as new firms enter the industry, some technological progress takes place and as a result the average cost of production decrease by 8 dollars (The ATC curve shifts down vertically by $8). Then, in the long run, the equilibrium price of the product will equal “?” dollars per unit, the equilibrium quantity “?” units, and there will be “?” firms in the industry each making an economic profit of “?” dollars.

Question 12

Consider the file Short Run & Long Run and ignore everything that happened in the previous questions. Start from the beginning. Assume that this is a constant-cost industry. Suppose that the demand for this product decreases by 1,200 units and stays at this new lower level for ever. Then, in the short run, the equilibrium price of the product will equal “?” dollars per unit, the equilibrium quantity “?” units, and there will be “?” firms in the industry each making an economic profit of “?” dollars.