7. Short-run supply and long-run equilibriumConsider the competitive market for ruthenium. Assume that no matter how many firms operate in the industry, every firm is identical and faces thesame marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves plotted in the following graph.8COSTS (Dollars per pound)28 2 N241600MC-ATCAVC12 16 20 24QUANTITY (Thousands of pounds)3220The following graph plots the market demand curve for ruthenium. 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 thepurple points (diamond symbol) to plot the short-run industry supply curve when there are 20 firms. Finally, use the green points (triangle symbol) toplot the short-run industry supply curve when there are 30 firms.7204PRICE (Dolars per pound)288816C00 120 240 300 430 600 720 $40 900 1000 1200QUANTITY (Thousands of pounds)Because you know that competitive firms earnDemandequilibrium.-0-If there were 20 firms in this market, the short-run equilibrium price of ruthenium would be Swould. Therefore, in the long run, firms wouldTrueSupply (10 firms)O FalseSupply (20 firms)ASupply (30 firms)per pound. From the graph, you can see that this means there will beper pound. At that price, firms in this industry.the ruthenium market.economic profit in the long run, you know the long-run equilibrium price must befirms operating in the ruthenium industry in long-runTrue or False: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns negative accounting profit.

Market demand means the quantity of goods that all the consumers in a market are willing and able to…

If there were 20 firms in this market, the short-run equilibrium price of ruthenium would be 3 . Therefore, in the long run, firms would would Because you know that competitive firms earn per pound. From the graph, you can see that this means there will be equilibrium. per pound. At that price, firms in this industry the ruthenium market. economic profit in the long run, you know the long-run equilibrium price must be firms operating in the ruthenium industry in long-run O True O False True or False: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns negative accounting profit.

If there were 20 firms in this market, the short-run equilibrium price of ruthenium would be 3 . Therefore, in the long run, firms would would Because you know that competitive firms earn per pound. From the graph, you can see that this means there will be equilibrium. per pound. At that price, firms in this industry the ruthenium market. economic profit in the long run, you know the long-run equilibrium price must be firms operating in the ruthenium industry in long-run O True O False True or False: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns negative accounting profit.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Firms In Competitive Markets

Section: Chapter Questions

Problem 7PA

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