(Figure 8.17) Initially, the constant-cost industry was in long-run equilibrium at point A when the demand for the good increased to D₂. How much output will be produced in the long run as a result of the demand increase? Price (5) 10 9 8- 6 5- 3- 0 3,000 O5,000 O 6,000 7,000 78 9 10 Quantity (1,000)

(Figure 8.17) Initially, the constant-cost industry was in long-run equilibrium at point A when the demand for the good increased to D₂. How much output will be produced in the long run as a result of the demand increase? Price (5) 10 9 8- 6 5- 3- 0 3,000 O5,000 O 6,000 7,000 78 9 10 Quantity (1,000)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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7. Short-run supply and long-run equilibrium Consider the competitive market for steel. 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. 100 90 80 COSTS (Dollars per ton) 888 50 60 70 70 40 ATC 30 20 80 10 MC AVC D 0 0 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of tons)
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On the preceding graph, use the blue rectangle (circle symbols) to fill in the area that represents profit or loss of the firm given the market price of $20 and the quantity of production from your previous answer. Note: In the following question, enter a positive number regardless of whether the firm earns a profit or incurs a loss. The rectangular area represents a short-run thousand per day for the firm. of
Suppose that firm is currently producing 15 units of a good at a market price of $12. The firm has a MC of $12 and an average total cost of $8. What is the firm's economic profit and is it maximizing profits? O $0, yes O $60, no $60, yes O $0, no Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
2. Calculating marginal revenue from a linear demand curve The blue curve on the following graph represents the demand curve facing a firm that can set its own prices. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. PRICE (Dollars per unit) 160 TOTAL REVENUE (Dol 140 120 2250 2000 1750 1500 1250 On the graph input tool, change the number found in the Quantity Demanded field to determine the prices that correspond to the production of 0, 10, 20, 25, 30, 40, and 50 units of output. Calculate the total revenue for each of these production levels. Then, on the following graph, use the green points (triangle symbol) to plot the results. 1000 750 500 250 0 5 10 15 20 25 30 35 40 45 50 QUANTITY (Units) 200 Demand 10 120 -40 15 30 35 QUANTITY (Number of units) 45 Graph Input Tool…
6. Deriving the short-run supply curve The following graph plots the marginal cost (MC) curve, average total cost (ATC) curve, and average variable cost (AVC) curve for a firm operating in the competitive market for sun lamps. 100 90 80 70 60 50 ATC 40 30 20 10 0 0 5 AVC MOD 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of lamps) For every price level given in the following table, use the graph to determine the profit-maximizing quantity of lamps for the firm. Further, select whether the firm will choose to produce, shut down, or be indifferent between the two in the short run. (Assume that when price exactly equals average variable cost, the firm is indifferent between producing zero lamps and the profit-maximizing quantity of lamps.) Lastly, determine whether the firm will earn a profit, incur a loss, or break even at each price. Price (Dollars per lamp) 10 20 32 40 50 60 Quantity (Lamps) Produce or Shut Down? Profit or Loss? On the following graph, use the orange points (square…
2. Suppose that the market for wind chimes is a competitive market. The following graph shows the daily cost curves of a particular firm operating in this PRICE (Dollars per wind chime) 40 36 32 28 24 20 16 2 8 4 0 0 MC 2 ATC AVC 6 4 8 QUANTITY (Thousands of wind chimes per day) + 10 12 14 16 18 20 market: a) In short run, at a market price of $26 per wind chime, how much will firm choose to produce per day? How do you know? b) If the market price is $26 in the short run, and the firm chooses to produce the quantity you obtained in question (a), indicate the area that represents firm's profit or loss in short run on the graph. c) What is this firm's shutdown price, that is the price below which it is optimal for the firm to shut down in short run? d) long run, all firms can enter and exit the market, and all entram the same costs as above. As this mark
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The following diagram shows the market demand for copper. Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 10 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 20 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 30 firms. 80 72 Supply (10 firms) 64 56 48 Demand Supply (20 firms) 40 32 Supply (30 firms) 24 16 8 120 240 360 480 600 720 840 960 1080 1200 QUANTITY (Thousands of pounds) If there were 10 firms in this market, the short-run equilibrium price of copper would be $ per pound. At that price, firms in this industry would . Therefore, in the long run, firms would the copper market. Because you know that competitive firms earn economic profit…
XYZ is a firm in a perfectly competitive market. Its marginal revenue and marginal cost are in the table below: Quantity Marginal Cost Marginal Revenue (Toys) (JD) (JD) 12 5 7 13 6 7 14 7 15 7 16 17 10 If XVZ is maximizing profit, how much profit is it making? Select one: O a. JD 0.5 b. JD 50 O c. JD 7 O d. There is no enough information to determine profit
(Figure: Profit-Maximization for Fabulous Finn's Flower Firm in the Short Run) Use Figure: Profit-Maximization for Fabulous Finn's Flower Firm in the Short Run. If the market price is Pa: Price, ATC, AVC, and MC (per unit) P2 91 92 9 Quantity (per perlod) firms will leave the industry, and the price will fall in the long run. there will be economic profits, and firms will enter the industry in the long run. the market supply curve will shift to the left, and price will fall in the long run. O the firm will produce q4 O O