3. 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.COSTS (Dollars per pound)PRICE (Dollars per pound)8072645648403224168087206456488 12 16 20 24 28 32QUANTITY (Thousands of pounds)The following graph plots the market demand curve for ruthenium.40241680Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 10 firms in the market. (Hint: You candisregard 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.00 1204MC-ATCDemandTrueAVCFalse00D3640240 360 480 600 720 840 960 1080 1200QUANTITY (Thousands of pounds)?Supply (10 firms)143Supply (20 firms)ASupply (30 firms)If there were 30 firms in this market, the short-run equilibrium price of ruthenium would be $would. Therefore, in the long run, firms would?Because you know that competitive firms earn.economic profit in the long run, you know the long-run equilibrium price must beper pound. From the graph, you can see that this means there will be firms operating in the ruthenium industry in long-run$equilibrium.per pound. At that price, firms in this industrythe ruthenium market.True or False: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns negative accounting profit.

Perfect competition is a market consisting of a large number of buyers and sellers. In this market…

If there were 30 firms in this market, the short-run equilibrium price of ruthenium would be $ would . Therefore, in the long run, firms 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 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. O True

If there were 30 firms in this market, the short-run equilibrium price of ruthenium would be $ would . Therefore, in the long run, firms 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 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. O True

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

If there were 20 firms in this market, the short-run equilibrium price of ruthenium would be per pound. At that price, firms in this industry would . Therefore, in the long run, firms would the ruthenium market. Because you know that competitive firms earn economic profit in the long run, you know the long-run equilibrium price must be per pound. From the graph, you can see that this means there will be firms operating in the ruthenium 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. True False
Suppose that the perfectly competitive tuna Industry is In long-run equilibrium at a price of $3 per can of tuna and a quantity of 600 million cans per year. Suppose the Surgeon General Issues a report saying that eating tuna is bad for your health. The Surgeon General's report will cause consumers to demand Shift the supply curve, the demand curve, or both on the following diagram to illustrate these short-run effects of the Surgeon General's announcement. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. Supply X Demand 400 600 800 QUANTITY (Millions of cans) 0 0 In the long run, some firms will respond by 5 0 200 0 200 Demand 1000 Shift the supply curve, the demand curve, or both on the following diagram to Illustrate both the short-run effects of the Surgeon General's announcement and the new long-run equilibrium after firms…
Give typing answer with explanation and conclusion Sort the following characteristics by whether they describe competitive markets, firms that can perfectly price-discriminate, both, or neither. maximize total surplus result in some deadweight loss zero economic profit in the long run eliminate consumer surplus
After the graphs: If there were 20 firms in the market, the short-run equilibrium price of copper would be $___ per pound. At that price, firms in this industry would ________ (earn a positive profit; shut down; earn zero profit; operate at a loss). Therefore, in the long-run, firms would ______ (enter; exit; neither enter nor exit) the copper market. Because you know that competitive firms earn ___ (positive; zero; negative) economic profit in the long-run, you know the long-run equilibrium price must be $___ per pound. From the graph, you can see that this means there will be ___ (10; 20; 30) 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.
2. In the competitive mink oil industry, each fim has the same cost function: C = 10,000 100 + 0.01q. Demand for mink oil is as follows: Q = p2 What will be the long-run equilibrium price and quantity in the market? How many fims are in the industıy?
9.7. Suppose that the demand for broccoli is given by Demand: Q = 1,000 – 5P - where Q is quantity per year measured in hundreds of bushels and P is price in dollars per hundred bushels. The long-run supply curve for broccoli is given by Supply: Q = 4P – 80 %3D a. Show that the equilibrium quantity here is Q = 400. At this output, what is the equilibrium price? How much in total is spent on broccoli? What is consumer surplus at this equilibrium? What is producer surplus at this equilibrium? b. How much in total consumer and producer surplus would be lost if Q = 300 instead of Q = 400? c. Show how the allocation of the loss of total con- sumer and producer surplus between suppliers and demanders described in part b depends on the price at which broccoli is sold. How would the loss be shared if P = 140? How about if P = 95? d. What would the total loss of consumer and pro- ducer surplus be if Q = 450 rather than Q = 400? Show that the size of this total loss also is indepen- dent of the…
Consider the market for solar power. Assume the market is perfectly competitive and initially in long-run equilibrium; solar power sells for $.25 per kwh (kilowatt hour, a unit of power). What happens to the market and the firm in the long run? Indicate clearly what happens to price, quantity, and profit, for each the market and the firm.
Consider the weekly market for gyros in a popular neighborhood close to campus. Suppose this market is operating in long-run competitive equilibrium with many gyro vendors in the neighborhood, each offering basically the same gyros. Due to the structure of the market, the vendors act as price takers and each individual vendor has no market powur. The following graph displays the supply (SMC) and demand (D) curves in the weekly market for gyros Place the black point (plus symbol) on the graph to indicate the market price and quantity that will result from competition. 5.0 AD 26 28 30 35 30 as 15 10 45 50 4.5 40 as Now assume that one of the gyro vendors successfully petitions the neighborhood development board to obtain exclusive rights to sell gyros in the neighborhood. This fiem buys up all the rest of the gyro food trucks in the area and begins to operate as a monopoly, Assume that this change does not affect demand and that the marginal cost curve of the new monopoly corresponds…
6. Short-run supply and long-run equilibrium Consider the perfectly 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 70 60 50 ATC 30 20 AVC 10 MC O 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of tons) COSTS (Dollars per ton) 8
A Wall Street journal headline states: "a nation of snackers snubs old favorite: the beloved cookie" as u.s. consumers adopted more carbohydrate-conscious diets, the number of cookie boxes sold declined 5.4 percent that year, the third consecutive year of decline. a. Assuming the cookie industry is perfectly competitive demonstrate using market supply and demand curves the effect of this decline in demand on equilibrium price and quantity in the short run. b. Assuming a cookie form was in equilibrium before the change in demand, and it is a constant-cost industry, demonstrate the effect of the decline in equilibrium price for an individual cookie firm in the short run. c. How might your answer to question "a" if you are considering long run?
The following problem traces the relationship between firm decisions, market supply, and market equilibrium in a perfectly competitive market. a. Complete the following table for a single firm in the short run. Using the information in the table, fill in the following supply schedule for this individual firm under perfect competition and indicate profit (positive or negative) at each output level. (Hint: At each hypothetical price, what is the MR of producing 1 more unit of output? Combine this with the MC of another unit to figure out the quantity supplied.)
Use the graphs below to answer the following questions. $lb $/gal 25 25 MC ATC 20 20 15 p1 15 10 10 P2 D 2 4 6. 8 10 1 3 4 5 Millions of gal/week Thousands of gal/week What is the long-run equilibrium price in this market? Please enter your answers as whole numbers with no decimal places (ie. 5 or $5 not 5.00 or "Five dollars"). How many gallons per week will the individual firm produce to maximize profits in equilibrium? Please enter your answers as whole numbers with extra words (ie. 5000 not "5000 gallons/week" or "Five thousand" ). What is the individual firm's long run economic profit?