The image is divided into two panels, titled "Figure 9.2."**Panel a: The Industry**- **Axes:** The vertical axis represents "Price per bushel ($)" and the horizontal axis represents "Bushels of wheat."- **Curves:** - The supply curve is labeled "S" and slopes upwards. - Two demand curves are shown, labeled "D1" and "D2," both sloping downwards. "D1" is positioned to the left of "D2."- **Equilibrium Points:** - The intersection of "S" and "D1" occurs at a price of $5 per bushel. - The intersection of "S" and "D2" occurs at a higher price, $7 per bushel. - An additional line indicates a price level of $9.**Panel b: A Representative Firm**- **Axes:** The vertical axis remains "Price per bushel ($)," and the horizontal axis indicates "Bushels of wheat."- **Curves:** - "MC" represents the marginal cost curve, which intersects both the average total cost curve ("ATC") and the average variable cost curve ("AVC").- **Equilibrium Point:** - Vertical dashed lines indicate quantities corresponding to different price levels: - At a price of $5, around 10 bushels are produced. - At a price of $7, around 12 or 13 bushels are produced. - At a price of $9, around 15 bushels are produced.This illustration is a classic economic model depicting supply, demand, and cost structures within an industry and a representative firm, commonly used to show market equilibrium concepts and firm-level production decisions. ## Analysis of Wheat Market DynamicsFigure 9.2 provides a detailed examination of the wheat market through two graphs.### Graph (a): The Industry- **Axes**: The vertical axis represents the price per bushel (\$), while the horizontal axis measures the quantity of bushels of wheat. - **Supply and Demand**: - The supply curve is labeled $ S $. - There are three demand curves labeled $ D_1 $, $ D_2 $, and $ D_3 $, each indicating different levels of demand.- **Price Levels**: - At $ D_1 $, the price is approximately \$5 per bushel. - $ D_2 $ intersects supply at around \$7. - $ D_3 $ intersects at \$9, indicating higher demand and price.### Graph (b): A Representative Firm- **Axes**: Similar to graph (a), the vertical axis shows the price, while the horizontal axis represents bushels of wheat. - **Cost Curves**: - $ MC $: Marginal Cost - $ ATC $: Average Total Cost - $ AVC $: Average Variable Cost- **Intersection Points**: - The MC curve intersects the ATC curve at the minimum point of the ATC. - Price lines at \$5, \$7, and \$9 are indicated horizontally from the vertical axis, showing potential market equilibrium points. Vertical lines at quantities 10, 12, and 15 bushels show production levels at different price levels.### Question"Refer to Figure 9.2. If demand for wheat is $ D_3 $, then in the long run"- $ \text{a. None of these is correct.} $- $ \text{b. the firm will exit the industry.} $- $ \text{c. new firms will enter the industry.} $- $ \text{d. the firm will shut down.} $This question assesses the implications of demand changes on industry dynamics and firm behavior, invoking concepts like market entry and exit based on profitability.

Refer to the information provided in Figure 9.2 below to answer the question(s) that follo a. The industry b. A representative firm MC ATC AVC D, D, 0. 10 12 13 15 Bushels of wheat Bushels of wheat Figure 9.2 Refer to Figure 9.2. If demand for wheat is D3, then in the long run Oa. None of these is correct. O b. the firm will exit the industry. new firms will enter the industry. O d. the firm will shut down. Price per bushel ($)

Refer to the information provided in Figure 9.2 below to answer the question(s) that follo a. The industry b. A representative firm MC ATC AVC D, D, 0. 10 12 13 15 Bushels of wheat Bushels of wheat Figure 9.2 Refer to Figure 9.2. If demand for wheat is D3, then in the long run Oa. None of these is correct. O b. the firm will exit the industry. new firms will enter the industry. O d. the firm will shut down. Price per bushel ($)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The figure is not finished but how will you draw the long run equilbirum at the price of $100 on this?
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