ult of the economic shock, the quantity traded is v the initial quantity traded, and the firm's profit is v its initial profit. Additionally, the economic shock had v on consumers. Consumers face a market price that is v the initial market price, and have a consumer surplus that is v the initial consumer surpl he blanks from the following options (You can use more than once if necessary): a positive effect / a negative effect / no effect / higher thar the same as
ult of the economic shock, the quantity traded is v the initial quantity traded, and the firm's profit is v its initial profit. Additionally, the economic shock had v on consumers. Consumers face a market price that is v the initial market price, and have a consumer surplus that is v the initial consumer surpl he blanks from the following options (You can use more than once if necessary): a positive effect / a negative effect / no effect / higher thar the same as
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Consider that a shock to the economy led to a decrease in the firm's variable cost (marginal cost and average variable cost are now lower at each level of output). As a result, the firm's new cost structure is defined by the
equations: MC= 20 + 0.02Q and AVC = 20 + 0.01Q. The firm fully adjusts after the shock.
What impact did the economic shock have in this market?
As a result of the economic shock, the quantity traded is
v the initial quantity traded, and the firm's profit is
v its initial profit. Additionally, the economic shock had
v on consumers. Consumers face a market price that is
v the initial market price, and have a consumer surplus that is
v the initial consumer surplus.
Fill in the blanks from the following options (You can use more than once if necessary): a positive effect / a negative effect / no effect / higher than / lower
than / the same as](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6037d279-25a5-4099-b5ec-b58fd345d0a2%2Fb0b3eafc-cf39-42cc-a820-2a47835decf4%2Fu73waig_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Consider that a shock to the economy led to a decrease in the firm's variable cost (marginal cost and average variable cost are now lower at each level of output). As a result, the firm's new cost structure is defined by the
equations: MC= 20 + 0.02Q and AVC = 20 + 0.01Q. The firm fully adjusts after the shock.
What impact did the economic shock have in this market?
As a result of the economic shock, the quantity traded is
v the initial quantity traded, and the firm's profit is
v its initial profit. Additionally, the economic shock had
v on consumers. Consumers face a market price that is
v the initial market price, and have a consumer surplus that is
v the initial consumer surplus.
Fill in the blanks from the following options (You can use more than once if necessary): a positive effect / a negative effect / no effect / higher than / lower
than / the same as
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