The following graph plots the market demand curve for rhenium. 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 15 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 20 firms. PRICE (Dollars per pound) 100 90 80 70 60 50 Supply (10 firms) Supply (15 firms) 40 Supply (20 firms) Demand 30 20 10 10 0 0 125 250 375 500 625 750 875 1000 1125 1250 QUANTITY (Thousands of pounds) If there were 10 firms in this market, the short-run equilibrium price of rhenium would be $ would . Therefore, in the long run, firms would per pound. At that price, firms in this industry the rhenium market. Because you know that competitive firms earn $ economic profit in the long run, you know the long-run equilibrium price must be per pound. From the graph, you can see that this means there will be firms operating in the rhenium 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. ○ True ○ False Consider the competitive market for rhenium. Assume that no matter how many firms operate in the industry, every firm is identical and faces the same marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves plotted in the following graph. COSTS (Dollars per pound) 100 00 90 80 70 50 20 ATC 30 30 10 20 10 MC ☐ AVC D 0 0 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of pounds) ?
The following graph plots the market demand curve for rhenium. 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 15 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 20 firms. PRICE (Dollars per pound) 100 90 80 70 60 50 Supply (10 firms) Supply (15 firms) 40 Supply (20 firms) Demand 30 20 10 10 0 0 125 250 375 500 625 750 875 1000 1125 1250 QUANTITY (Thousands of pounds) If there were 10 firms in this market, the short-run equilibrium price of rhenium would be $ would . Therefore, in the long run, firms would per pound. At that price, firms in this industry the rhenium market. Because you know that competitive firms earn $ economic profit in the long run, you know the long-run equilibrium price must be per pound. From the graph, you can see that this means there will be firms operating in the rhenium 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. ○ True ○ False Consider the competitive market for rhenium. Assume that no matter how many firms operate in the industry, every firm is identical and faces the same marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves plotted in the following graph. COSTS (Dollars per pound) 100 00 90 80 70 50 20 ATC 30 30 10 20 10 MC ☐ AVC D 0 0 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of pounds) ?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:The following graph plots the market demand curve for rhenium.
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 15 firms. Finally, use the green points (triangle symbol) to
plot the short-run industry supply curve when there are 20 firms.
PRICE
(Dollars per pound)
100
90
80
70
60
50
Supply (10 firms)
Supply (15 firms)
40
Supply (20 firms)
Demand
30
20
10
10
0
0
125
250 375 500 625 750 875 1000 1125 1250
QUANTITY (Thousands of pounds)
If there were 10 firms in this market, the short-run equilibrium price of rhenium would be $
would
. Therefore, in the long run, firms would
per pound. At that price, firms in this industry
the rhenium market.
Because you know that competitive firms earn
$
economic profit in the long run, you know the long-run equilibrium price must be
per pound. From the graph, you can see that this means there will be firms operating in the rhenium 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.
○ True
○ False
Transcribed Image Text:Consider the competitive market for rhenium. Assume that no matter how many firms operate in the industry, every firm is identical and faces the
same marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves plotted in the following graph.
COSTS (Dollars per pound)
100
00
90
80
70
50
20
ATC
30
30
10
20
10
MC ☐
AVC
D
0
0 10 20
30 40
50 60 70
80
90 100
QUANTITY (Thousands of pounds)
?
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