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 costs (MC) and average costs (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.**Graphs Explanation:****Soy Bean Market Graph:**- **Axes:** The vertical axis represents Price ($), and the horizontal axis represents Quantity (millions of bushels).- **Curves:** - **SRS (Short-run Supply):** An upward-sloping line indicating the quantity of soy beans suppliers are willing to produce at various prices in the short run. - **LRS (Long-run Supply):** A horizontal line reflecting the price level in long-run equilibrium at $9. - **Demand (D):** A downward-sloping line illustrating the quantity of soy beans consumers will demand at different prices.- **Equilibrium Points:** - **A:** Initial long-run equilibrium (Price = $9, Quantity = 10 million bushels). - **B:** New short-run equilibrium after the demand shift due to the medical study. - **C:** New long-run equilibrium after adjustments.**Roy's Soys Graph:**- **Axes:** The vertical axis represents Price ($), and the horizontal axis represents Quantity (millions of bushels).- **Curves:** - **MC (Marginal Cost):** An upward-sloping curve showing the cost of producing an additional unit. - **AC (Average Cost):** A U-shaped curve indicating the average cost per unit at different production levels.-

The increase in demand for Soybeans shifts the demand curve to rightward (D2). It intersects the…

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.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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