7. Short-run supply and long-run equilibriumConsider the perfectly competitive market for copper. Assume that, regardless of how many firms are in the industry, every firm in the industry isidentical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph.COSTS (Dollars per kilogram)80726456484032168004MC8ATCAVC□12 16 20 24 28 32QUANTITY (Thousands of kilograms)36The following diagram shows the market demand for copper.□40?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 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. plot the short-run industry supply curve when there are 30 firms.Note: Points will snap to the quantities of output.PRICE (Dollars per kilogram)807264564840322416800 118 240 358 480 598 720 838 960 1078 1200QUANTITY (Thousands of kilograms)DemandSupply (10 firms)TrueSupply (20 firms)If there were 20 firms in this market, the short-run equilibrium price of copper would be $wouldTherefore, in the long run, firms wouldFalseSupply (30 firms)?Because you know that perfectly competitive firms earnbe $equilibrium.economic profit in the long run, you know the long-run equilibrium price mustper kilogram. From the graph, you can see that this means there will be firms operating in the copper industry in long-runper kilogram. At that price, firms in this industrythe copper market.True or False: Each of the firms operating in this industry in the long run earns positive accounting profit.

Supply Curve is the curve that denotes the different levels of quantity that a producer is willing…

plot the short-run industry supply curve when there are 30 firms. Note: Points will snap to the quantities of output. PRICE (Dollars per kilogram) 80 72 64 56 48 40 32 24 16 8 0 0 118 240 358 480 598 720 838 960 1078 1200 QUANTITY (Thousands of kilograms) Demand Supply (10 firms) True Supply (20 firms) If there were 20 firms in this market, the short-run equilibrium price of copper would be $ would Therefore, in the long run, firms would False Supply (30 firms) ? Because you know that perfectly competitive firms earn be $ equilibrium. economic profit in the long run, you know the long-run equilibrium price must per kilogram. From the graph, you can see that this means there will be firms operating in the copper industry in long-run per kilogram. At that price, firms in this industry the copper market. True or False: Each of the firms operating in this industry in the long run earns positive accounting profit.

plot the short-run industry supply curve when there are 30 firms. Note: Points will snap to the quantities of output. PRICE (Dollars per kilogram) 80 72 64 56 48 40 32 24 16 8 0 0 118 240 358 480 598 720 838 960 1078 1200 QUANTITY (Thousands of kilograms) Demand Supply (10 firms) True Supply (20 firms) If there were 20 firms in this market, the short-run equilibrium price of copper would be $ would Therefore, in the long run, firms would False Supply (30 firms) ? Because you know that perfectly competitive firms earn be $ equilibrium. economic profit in the long run, you know the long-run equilibrium price must per kilogram. From the graph, you can see that this means there will be firms operating in the copper industry in long-run per kilogram. At that price, firms in this industry the copper market. True or False: Each of the firms operating in this industry in the long run earns positive accounting profit.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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8. Short-run and long-run effects of a shift in demand 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 good for your health. The Surgeon General's report will cause consumers to demand tuna at every price. In the short run, firms will respond by 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. PRICE (Dollars per can Supply 5 Demand 0 0 200 400 600 800 Demand 1000 1200 QUANTITY OF OUTPUT (Millions of cans) In the long run, some firms will respond by Supply until new technologies are discovered that…
8. Short-run and long-run effects of a shift in demand Suppose that the tempeh industry is initially operating in long-run equilibrium at a price level of $5 per pound of tempeh and quantity of 100 million pounds per year. Suppose a leading foodie video blogger raises awareness for a scholarly article that links tempeh consumption to premature hair loss and unhealthy skin. The viral video is expected to cause consumers to demand less tempeh at every price. In the short run, firms will respond by producing the same amount of tempeh and running at a loss Shift the demand curve, the supply curve, or both on the following graph to illustrate these short-run effects of the viral video. PRICE (Dollars per pound) 10 9 8 1 0 0 20 Supply 40 60 80 100 120 140 QUANTITY (Millions of pounds) In the long run, some firms will respond by D. D₂ 160 180 200 consumer demand returns to its original level Demand Supply (?) exiting the industry until and unhealthy skin. The viral video is expected to cause…
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The market demand and supply equations for a product of a perfectly competitive industry. Qd=60-10P Qs=30+2.5P Where Q is quantity and P is price. Required: i.What is the equlibrium price and quantity? ii.Suppose that an increase in income resulted in the new demand equation Qd=80-10P What is the new equilibrium price and quantity? Suppose the government enact a legislation that imposes a price equivalent to the original equilibrium price.What kind of price legislation is this?Explain two implications of such a price control.
At the current short-run market price, firms will __________ in the short run. In the long run, ____________ the market given the current market price.
Assume that the cost data in the following table are for a purely competitive producer: Average Average Average Total Variable Marginal Cost Total Fixed Product Cost Cost Cost 1 $60.00 $45.00 $105.00 $ 45.00 30.00 42.50 72.50 40.00 3 20.00 40.00 60.00 35.00 4 15.00 37.50 52.50 30.00 12.00 37.00 49.00 35.00 6. 10.00 37.50 47.50 40.00 7 8.57 38.57 47.14 45.00 7.50 40.63 48.13 55.00 9. 6.67 43.33 50.00 65.00 10 6.00 46.50 52.50 75.00 Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Select "Not applicable" and enter a value of "0" for output if the firm does not produce. a. At a product price of $57.00 (i) Will this firm produce in the short run? (Click to select) V (ii) If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? |(Click to select V output = units per firm (iii) What economic profit or loss will the firm realize per unit of output? |(Click to select v per unit = $ b.…
M/c question - Micro 31) Refer to Figure 14-13. When a firm in a competitive market, like the one depicted in panel (a), observes market price rising from P1 to P2, what is most likely the cause? A. the exit of existing firms in the market B. an increase in market supply from Supply0 to Supply1 C. the entrance of new firms into the market D. an increase in market demand from Demand0 to Demand1 30) A profit-maximizing firm in a competitive market discovers that, at its current level of production, price is greater than marginal cost. What should it do? A. It should increase its output. B. It should reduce its output but continue operating. C. It should shut down. D. It should keep output the same.
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c. Suppose that a new government is elected that wants to keep out the poor. It declares that the minimum rent that landlords can charge is $2,500 per month. If the government can enforce that price floor, will there be a surplus or a shortage? (Click to select) Of how many units? Japartments per month And how many units will actually be rented each month? apartments:
Suppose production is reduced by 60 percent for each of the suppliers in this industry. Draw a new market curve and answer the following questions based on your new supply curve and the original demand curve. In Table 3.1, the equilibrium market quantity would be Table 3,3 Individual Demand and Supply Schedules. Quantity Demanded By: Price 4.00 Ali Kelly Jessie Market 4 1 3.00 8 2.00 12 1.00 16 3.00 10 2.00 5 1.00 0 17 units Quantity Supplied by: Price Andy Maria Jose Market 4.00 15 15 11 9 7 5 12 units 25 units 9746 10 units 2 1234 11 7 3