Not graded 7. Short-run supply and long-run equilibriumConsider the competitive market for copper. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical andfaces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph.1009080706050口АТС20AVC10MC O2530354045505101520QUANTITY (Thousands of pounds)The following diagram shows the market demand for copper.COSTS (Dollars per pound) * CENGAGE MINDTAPQ Search this couHomework (Ch 14)1009080Supply (20 firms)7060Supply (30 firms)5040Supply (40 firms)Demand3020105006257508751000 1125 1250125250375QUANTITY (Thousands of pounds)If there were 30 firms in this market, the short-run equilibrium price of copper would be $Therefore, in the long run, firms wouldper pound. At that price, firms in this industry wouldv the copper market.economic profit in the long run, you know the long-run equilibrium price must beBecause you know that competitive firms earnper pound. From the graph, you can see that this means there will be v firms operating in the copper industry in long-run equilibrium.True or False: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns negative accounting profit.O TrueO'FalsePRICE (Dollars per pound)

In economics, the long-run is a theoretical concept in which all markets are in equilibrium and all…

If there were 30 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 v the copper market. Because you know that competitive firms earn v economic profit in the long run, you know the long-run equilibrium price must be 24 per pound. From the graph, you can see that this means there will be v firms operating in the copper industry in long-run equilibrium. True or False: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns negative accounting profit. O True O False

If there were 30 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 v the copper market. Because you know that competitive firms earn v economic profit in the long run, you know the long-run equilibrium price must be 24 per pound. From the graph, you can see that this means there will be v firms operating in the copper industry in long-run equilibrium. True or False: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns negative accounting profit. O True O False

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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