Suppose there are 8 firms in this industry, each of which has the cost curves previously shown. On the following graph, use the orange points (square symbol) to plot points along the portion of the industry's short-run supply curve that corresponds to prices where there is positive output. (Note: You are given more points to plot than you need.) Then, place the black point (plus symbol) on the graph to indicate the short-run equilibrium price and quantity in this market. Note: Dashed drop lines will automatically extend to both axes. PRICE (Dollars per shirt) 100 90 80 Demand 70 60 50 40 30 20 10 0 0 80 160 240 320 400 480 560 640 720 800 QUANTITY (Thousands of shirts) At the current short-run market price, firms will Industry's Short-Run Supply Equilibrium in the short run. In the long run,

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Suppose there are 8 firms in this industry, each of which has the cost curves previously shown.
On the following graph, use the orange points (square symbol) to plot points along the portion of the industry's short-run supply curve that
corresponds to prices where there is positive output. (Note: You are given more points to plot than you need.) Then, place the black point (plus
symbol) on the graph to indicate the short-run equilibrium price and quantity in this market.
Note: Dashed drop lines will automatically extend to both axes.
100
8
90
80 Demand
70
PRICE (Dollars per shirt)
8
60
50
40
20
10
0
0
+
80 160 240 320 400 480 560 640 720 800
QUANTITY (Thousands of shirts)
At the current short-run market price, firms will
Industry's Short-Run Supply
Equilibrium
in the short run. In the long run,
?
Transcribed Image Text:Suppose there are 8 firms in this industry, each of which has the cost curves previously shown. On the following graph, use the orange points (square symbol) to plot points along the portion of the industry's short-run supply curve that corresponds to prices where there is positive output. (Note: You are given more points to plot than you need.) Then, place the black point (plus symbol) on the graph to indicate the short-run equilibrium price and quantity in this market. Note: Dashed drop lines will automatically extend to both axes. 100 8 90 80 Demand 70 PRICE (Dollars per shirt) 8 60 50 40 20 10 0 0 + 80 160 240 320 400 480 560 640 720 800 QUANTITY (Thousands of shirts) At the current short-run market price, firms will Industry's Short-Run Supply Equilibrium in the short run. In the long run, ?
Consider the competitive market for dress shirts. The following graph shows the marginal cost (MC), average total cost (AIC), and average variable
cost (AVC) curves for a typical firm in the industry.
COSTS (Dollars)
PRICE (Dollars per shirt)
100
90
80
70
60
50
40
100
30
90
20
80
10
70
Price
(Dollars per shirt)
15
20
25
55
70
85
0
60
50
40
30
20
10
0
0
For each price in the following table, use the graph to determine the number of shirts this firm would produce in order to maximize its profit. Assume
that when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero shirts and the profit-maximizing
0
+
10
quantity. Also, indicate whether the firm will produce, shut down, or be indiferent between the two in the short run. Lasty, determine whether it will
make a profit, suffer a loss, or break even at each price.
0
0
MC D
D
On the following graph, use the orange points (square symbol) to plot points along the portion of the firm's short-run supply curve that corresponds
to prices where there is positive output. (Note: You are given more points to plot than you need.)
+
10 20
O
ATC
AVC
20 30 40 50 60
60 70
QUANTITY (Thousands of shirts)
30 40 50
☐
Quantity
(Shirts)
0
70 80 90 100
60 20
?
Produce or Shut Down?
80 90 100
Profit or Loss?
--0-
Firm's Short-Run Supply
(?)
Transcribed Image Text:Consider the competitive market for dress shirts. The following graph shows the marginal cost (MC), average total cost (AIC), and average variable cost (AVC) curves for a typical firm in the industry. COSTS (Dollars) PRICE (Dollars per shirt) 100 90 80 70 60 50 40 100 30 90 20 80 10 70 Price (Dollars per shirt) 15 20 25 55 70 85 0 60 50 40 30 20 10 0 0 For each price in the following table, use the graph to determine the number of shirts this firm would produce in order to maximize its profit. Assume that when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero shirts and the profit-maximizing 0 + 10 quantity. Also, indicate whether the firm will produce, shut down, or be indiferent between the two in the short run. Lasty, determine whether it will make a profit, suffer a loss, or break even at each price. 0 0 MC D D On the following graph, use the orange points (square symbol) to plot points along the portion of the firm's short-run supply curve that corresponds to prices where there is positive output. (Note: You are given more points to plot than you need.) + 10 20 O ATC AVC 20 30 40 50 60 60 70 QUANTITY (Thousands of shirts) 30 40 50 ☐ Quantity (Shirts) 0 70 80 90 100 60 20 ? Produce or Shut Down? 80 90 100 Profit or Loss? --0- Firm's Short-Run Supply (?)
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