Answered: If it is not in long-run equilibrium,…

If it is not in long-run equilibrium, what will happen in this industry to restore long-run equilibrium? 11 In long-run equilibrium, what is the firm's profit-maximizing quantity?

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

10 If it is not in long-run equilibrium, what will happen in this industry to restore long-run equilibrium?

11 In long-run equilibrium, what is the firm's profit-maximizing quantity?

Figure 12-18
Revenue
MC
and cost
(dollars
per unit)
d
$40
MR
ATC
AVC
24
C
20
14
12
8
a
55
100 150
200
Quantity
.......

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11. Consider a competitive market where firms have U-shaped cost curves. Which of the following is true? a. The long run market supply curve for a constant cost industry is upward sloping, and, the short run supply curve of each firm is upward sloping. b. The long run market supply curve for an increasing cost industry is upward sloping, and, the short run supply curve of each firm is upward sloping. c. The long run market supply curve for a decreasing cost industry is upward sloping, and, the short run supply curve of each firm is upward sloping. d. The long run market supply curve for an increasing cost industry is downward sloping, and, the short run supply curve of each firm is horizontal. e. None of the above.
4. The demand for an individual firm's output depends on the demand for the industry's output, the number of firms in the industry, and the structure of the industry. O a. True Ob. False
3. Suppose a perfectly competitive firm is operating at a level of output such that P> MC. Would you advise this firm to keep producing at this level or should it increase or decrease its output? Why? (Hint: it will help you to draw a graph for a perfectly competitive firm in short run equilibrium. The level of profit in equilibrium does not matter).
11. The graph below shows the marginal revenue, marginal cost, and average total cost at different quantities for a firm in a perfectly competitive market. If this firm chooses to produce no output in the short run, what must the market price be? A-Below $20 $21-$30 $31-$40 $41-$50 Above $50 7. firm's implicit costs are $10,000, explicit costs are $5,000, and its total revenue is $10,000. This firm is earning A-normal accounting profit B-positive accounting profit of $5,000 C-positive economic profit of $5,000 D-normal economic profit E-negative accounting profit of $5,000
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7 A local tavern in a perfectly competitive market was in a long-run equilibrium. Then, a scientific breakthrough determines that beer prevents heart attacks, resulting in an increase in demand for beer. Describe the market processes that affect the tavern in both the short run and the new long-run equilibrium.
7. Short-run supply and long-run equilibrium Consider the competitive market for ruthenium. Assume that no matter how many firms operate in the industry, every firm is identical and faces the same marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves plotted in the following graph. COSTS (Dollars per pound) 100 90 80 70 40 30 20 10 0 0 MC D 5 10 ATC 15, 15 AVC ☐ 15 20 25 30 35 QUANTITY (Thousands of pounds) 40 + 45 50 The following graph plots the market demand curve for ruthenium. (?)
22. Which of these is a valid difference between firms in competitive price-searcher and price-taker markets? Price-taker firms advertise their products, while price-searcher firms do not. Price-searcher firms advertise their products, while price-taker firms do not. Price takers earn economic profit in the short run, while price searchers do not. Price searchers earn economic profit in the long run, while price takers do not.