The following diagram shows the market demand for titanium. 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 24 16 8 D Demand 0 0 120 240 360 480 600 720 840 960 1080 1200 QUANTITY (Thousands of pounds) --0 Supply (10 firms) Because you know that competitive firms earn bes equilibrium. $ Supply (20 firms) 4 Supply (30 firms) If there were 10 firms in this market, the short-run equilibrium price of titanium would be would Therefore, in the long run, firms would per pound, At that price, firms in this industry the titanium market. economic profit in the long run, you know the long-run equilibrium price must firms operating in the titanium industry in long-run per pound. From the graph, you can see that this means there will be
The following diagram shows the market demand for titanium. 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 24 16 8 D Demand 0 0 120 240 360 480 600 720 840 960 1080 1200 QUANTITY (Thousands of pounds) --0 Supply (10 firms) Because you know that competitive firms earn bes equilibrium. $ Supply (20 firms) 4 Supply (30 firms) If there were 10 firms in this market, the short-run equilibrium price of titanium would be would Therefore, in the long run, firms would per pound, At that price, firms in this industry the titanium market. economic profit in the long run, you know the long-run equilibrium price must firms operating in the titanium industry in long-run per pound. From the graph, you can see that this means there will be
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Ab 37
Economics
Transcribed Image Text:The following diagram shows the market demand for titanium.
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
2238 22
72
64
56
48
40
32
24
16
8
0
0
D
Demand
120 240 360 480 600 720 840 960 1080 1200
QUANTITY (Thousands of pounds)
--0-
Because you know that competitive firms earn
bes
equilibrium.
Supply (10 firms)
$
Supply (20 firms)
48
Supply (30 firms)
If there were 10 firms in this market, the short-run equilibrium price of titanium would be
would
Therefore, in the long run, firms would
per pound. At that price, firms in this industry
the titanium market.
economic profit in the long run, you know the long-run equilibrium price must
firms operating in the titanium industry in long-run
per pound. From the graph, you can see that this means there will be
Transcribed Image Text:5. Short-run supply and long-run equilibrium
Consider the competitive market for titanium. 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-D
ATC
Use the orance points
AVC
D
0
4 8 12 16 20 24 28 32 36
QUANTITY (Thousands of pounds)
B
The following diagram shows the market demand for titanium.
40
(@
to plot the initial short-run industry supply curve when there are 10 firms in the market. (Hint: You can
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