The accompanying graphs represent the soy bean market, a competitive market and Roy's Soys, an individual firm in the market for soy beans. The soy bean market graph depicts the short-run supply (SRS), long-run supply (LRS), and demand (D). The graph for Roy's Soys represents marginal consts (MC) and average costgs (AC). The market and the firm are currently in long-run equilibrium at point A. a. Demonstrate what happens in the short run on both graphs when a new medical study shows soy beans to be an effective weight-loss supplement. On the market graph, you will shift a curve (or curves). On the firm's graph, use "Price 2" to draw a new price line for the firm. On both graphs, indicate the new equilibrium points with the points labeled B. b. Now, demonstrate the changes that get both graphs back to long run equilibrium. Use shift(s) for the market and "Price 3" for the firm. Indicate the new long-run equilibrium with the green points labeled C.
The accompanying graphs represent the soy bean market, a competitive market and Roy's Soys, an individual firm in the market for soy beans. The soy bean market graph depicts the short-run supply (SRS), long-run supply (LRS), and demand (D). The graph for Roy's Soys represents marginal consts (MC) and average costgs (AC). The market and the firm are currently in long-run equilibrium at point A. a. Demonstrate what happens in the short run on both graphs when a new medical study shows soy beans to be an effective weight-loss supplement. On the market graph, you will shift a curve (or curves). On the firm's graph, use "Price 2" to draw a new price line for the firm. On both graphs, indicate the new equilibrium points with the points labeled B. b. Now, demonstrate the changes that get both graphs back to long run equilibrium. Use shift(s) for the market and "Price 3" for the firm. Indicate the new long-run equilibrium with the green points labeled C.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
![The
accompanying graphs represent the soy bean market, a competitive market and Roy's Soys, an individual firm in the
market for
soy
beans. The
soy
bean market graph depicts the short-run supply (SRS), long-run supply (LRS), and demand
(D). The graph for Roy's Soys represents marginal consts (MC) and average costgs (AC). The market and the firm are
currently in long-run equilibrium at point A.
a. Demonstrate what happens in the short run on both graphs when a new medical study shows soy beans to be an effective
weight-loss supplement. On the market graph, you will shift a curve (or curves). On the firm's graph, use "Price 2" to draw a
new price line for the firm. On both graphs, indicate the new equilibrium points with the points labeled B.
b. Now, demonstrate the changes that get both graphs back to long run equilibrium. Use shift(s) for the market and "Price 3"
for the firm. Indicate the new long-run equilibrium with the green points labeled C.
Soy Bean Market
Roy's Soys
20
20
Price 2
Price 3
19
SRS
19
MC
18
18
17
17
AC
16
16
15
15
14
14
13
13
12
12
11
11
10
A
LRS
10
A
9.
9.
Price
8
7
7
4
4
3
3
2
1
1
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Quantity (millions of bushels)
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Quantity (millions of bushels)
Price ($)
Price ($)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd78c4e7c-490d-4a81-a291-db1f5fdbd52e%2Fea599070-ab26-4aa3-a8a6-1c832cc067af%2Fw7aby74_processed.png&w=3840&q=75)
Transcribed Image Text:The
accompanying graphs represent the soy bean market, a competitive market and Roy's Soys, an individual firm in the
market for
soy
beans. The
soy
bean market graph depicts the short-run supply (SRS), long-run supply (LRS), and demand
(D). The graph for Roy's Soys represents marginal consts (MC) and average costgs (AC). The market and the firm are
currently in long-run equilibrium at point A.
a. Demonstrate what happens in the short run on both graphs when a new medical study shows soy beans to be an effective
weight-loss supplement. On the market graph, you will shift a curve (or curves). On the firm's graph, use "Price 2" to draw a
new price line for the firm. On both graphs, indicate the new equilibrium points with the points labeled B.
b. Now, demonstrate the changes that get both graphs back to long run equilibrium. Use shift(s) for the market and "Price 3"
for the firm. Indicate the new long-run equilibrium with the green points labeled C.
Soy Bean Market
Roy's Soys
20
20
Price 2
Price 3
19
SRS
19
MC
18
18
17
17
AC
16
16
15
15
14
14
13
13
12
12
11
11
10
A
LRS
10
A
9.
9.
Price
8
7
7
4
4
3
3
2
1
1
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Quantity (millions of bushels)
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Quantity (millions of bushels)
Price ($)
Price ($)
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