The following diagram shows the market demand for copper. 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 can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 20 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 30 firms. PRICE (Dollars per pound) 80 72 64 56 48 40 32 16 8 0 0 Demand 120 240 360 480 600 720 840 960 1080 1200 QUANTITY (Thousands of pounds) -0 Supply (10 firms) Because you know that competitive firms earn know the long-run equilibrium price must be $ that this means there will be True False Supply (20 firms) A Supply (30 firms) If there were 20 firms in this market, the short-run equilibrium price of copper would be per pound. At that price, firms in this industry would Therefore, in the long run, firms would $ the copper market. ? economic profit in the long run, you per pound. From the graph, you can see firms operating in the copper industry in long-run equilibrium. True or False: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns negative accounting profit.
The following diagram shows the market demand for copper. 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 can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 20 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 30 firms. PRICE (Dollars per pound) 80 72 64 56 48 40 32 16 8 0 0 Demand 120 240 360 480 600 720 840 960 1080 1200 QUANTITY (Thousands of pounds) -0 Supply (10 firms) Because you know that competitive firms earn know the long-run equilibrium price must be $ that this means there will be True False Supply (20 firms) A Supply (30 firms) If there were 20 firms in this market, the short-run equilibrium price of copper would be per pound. At that price, firms in this industry would Therefore, in the long run, firms would $ the copper market. ? economic profit in the long run, you per pound. From the graph, you can see firms operating in the copper industry in long-run equilibrium. True or False: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns negative accounting profit.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:7. Short-run supply and long-run equilibrium
Consider the competitive market for copper. Assume that, regardless of how many firms are in the
industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost
(ATC), and average variable cost (AVC) curves shown on the following graph.
COSTS (Dollars per pound)
80
72
64
56
48
40
32
24
16
8
0
0
MC
ATC
AVC
4 8 12 16 20 24
QUANTITY (Thousands of pounds)
0
n
28 32
U
36 40
(?)
Transcribed Image Text:The following diagram shows the market demand for copper.
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 can disregard the portion of the supply curve that
corresponds to prices where there is no output since this is the industry supply curve.) Next, use
the purple points (diamond symbol) to plot the short-run industry supply curve when there are 20
firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve
when there are 30 firms.
PRICE (Dollars per pound)
80
72
64
56
48
40
32
16
8
0
0
Demand
120 240 360 480 600 720 840 960 1080 1200
QUANTITY (Thousands of pounds)
-0
Supply (10 firms)
Because you know that competitive firms earn
know the long-run equilibrium price must be $
that this means there will be
True
False
Supply (20 firms)
A
Supply (30 firms)
If there were 20 firms in this market, the short-run equilibrium price of copper would be
per pound. At that price, firms in this industry would
Therefore, in the long run, firms would
$
the copper market.
?
economic profit in the long run, you
per pound. From the graph, you can see
firms operating in the copper industry in long-run equilibrium.
True or False: Assuming implicit costs are positive, each of the firms operating in this industry in
the long run earns negative accounting profit.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education