The market for calculators is a perfectly competitive industry facing typical U-shaped ATC, AVC, and MC cost curves. Demand is linear and has a downward slope. The industry is filled with many homogeneous firms. Using a side-by-side graph that depicts both the market (on the left) and a representative firm (on the right), graphically depict what will happen to (a) P (price), (b) Q (market output), (c) q (representative firm's output), and (d) π (representative firm's profit) when the market moves from the original short run equilibrium (SRE) with positive profits to a new long run equilibrium (LRE).
The market for calculators is a perfectly competitive industry facing typical U-shaped ATC, AVC, and MC cost curves. Demand is linear and has a downward slope. The industry is filled with many homogeneous firms. Using a side-by-side graph that depicts both the market (on the left) and a representative firm (on the right), graphically depict what will happen to (a) P (price), (b) Q (market output), (c) q (representative firm's output), and (d) π (representative firm's profit) when the market moves from the original short run equilibrium (SRE) with positive profits to a new long run equilibrium (LRE).
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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- The market for calculators is a
perfectly competitive industry facing typical U-shaped ATC,AVC , and MC costcurves. - Demand is linear and has a downward slope.
- The industry is filled with many homogeneous firms.
Using a side-by-side graph that depicts both the market (on the left) and a representative firm (on the right), graphically depict what will happen to (a) P (price), (b) Q (market output), (c) q (representative firm's output), and (d) π (representative firm's profit) when the market moves from the original short run equilibrium (SRE) with positive profits to a new long run equilibrium (LRE).
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