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Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 20 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 30 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 40 firms. 100 90 Supply (20 firms) BO Supply (30 firms) Supply (40 firme) Qemand 0 125 250 375 500 625 750 875 1000 1125 1250 QUANTITY (Thousands of pounds) If there were 20 firms in this market, the short-run equilibrium price of titanium would be would per pound. At that price, firms in this industry the titanium market. Therefore, in the long run, firms would 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 titanium industry in long-run equilibrium. PRICE (Dollars per pound) 20 10 0 D

Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 20 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 30 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 40 firms. 100 90 Supply (20 firms) BO Supply (30 firms) Supply (40 firme) Qemand 0 125 250 375 500 625 750 875 1000 1125 1250 QUANTITY (Thousands of pounds) If there were 20 firms in this market, the short-run equilibrium price of titanium would be would per pound. At that price, firms in this industry the titanium market. Therefore, in the long run, firms would 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 titanium industry in long-run equilibrium. PRICE (Dollars per pound) 20 10 0 D

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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--- ### Homework (Ch 09) #### 6. 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. ![Graph Depicting Costs](https://userURL.com) **Graph Explanation:** The above graph illustrates the cost structures for a firm in the titanium market. Key curves include: - **MC (Marginal Cost):** This is represented by a purple curve and shows how the cost of producing one more unit of a good changes as the quantity produced increases. - **ATC (Average Total Cost):** This green curve illustrates the total cost per unit of production, combining both fixed and variable costs divided by the quantity of output. - **AVC (Average Variable Cost):** The orange curve shows the variable costs (which change with the quantity of output produced) divided by the quantity of output. The graph plots the costs (dollars per pound) against the quantity (in thousands of pounds). Key Points to Note: - The AVC curve lies below the ATC curve because ATC includes both variable and fixed costs, whereas AVC includes only variable costs. - The MC curve intersects both the AVC and ATC curves at their minimum points, which is characteristic in cost curve analysis. Understanding these curves is crucial for analyzing how firms determine their production levels in both the short run and the long run within a competitive market. ---
Transcribed Image Text:--- ### Homework (Ch 09) #### 6. 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. ![Graph Depicting Costs](https://userURL.com) **Graph Explanation:** The above graph illustrates the cost structures for a firm in the titanium market. Key curves include: - **MC (Marginal Cost):** This is represented by a purple curve and shows how the cost of producing one more unit of a good changes as the quantity produced increases. - **ATC (Average Total Cost):** This green curve illustrates the total cost per unit of production, combining both fixed and variable costs divided by the quantity of output. - **AVC (Average Variable Cost):** The orange curve shows the variable costs (which change with the quantity of output produced) divided by the quantity of output. The graph plots the costs (dollars per pound) against the quantity (in thousands of pounds). Key Points to Note: - The AVC curve lies below the ATC curve because ATC includes both variable and fixed costs, whereas AVC includes only variable costs. - The MC curve intersects both the AVC and ATC curves at their minimum points, which is characteristic in cost curve analysis. Understanding these curves is crucial for analyzing how firms determine their production levels in both the short run and the long run within a competitive market. ---
### Homework (Ch 09) The following graph shows the market demand for titanium. --- #### Instructions Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 20 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 30 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 40 firms. --- ### Graph Description - **Y-axis:** Price (cents per pound) - **X-axis:** Quantity (thousands of pounds) - **Curves/Points:** - **Demand Curve:** A blue straight line descending from the top left to the bottom right. - **Supply Curve (20 firms):** Represented by orange square points. - **Supply Curve (30 firms):** Represented by purple diamond points. - **Supply Curve (40 firms):** Represented by green triangle points. --- ### Questions 1. **If there were 20 firms in this market, the short-run equilibrium price of titanium would be $______ per pound. At that price, firms in this industry would ______. Therefore, in the long run, firms would ______ the titanium market.** 2. **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 titanium industry in long-run equilibrium.** --- ### Help & Feedback If you need further assistance with the homework, feel free to use the help and feedback options available on the platform. --- ### Additional Resources - **Study Tools for Principles of Economics:** Enhance your understanding with extra study tools. - **College Success Tips:** Discover tips to succeed in your academic journey. - **Career Success Tips:** Get advice on building a successful career. Feel free to explore these resources to aid your learning experience. Happy studying!
Transcribed Image Text:### Homework (Ch 09) The following graph shows the market demand for titanium. --- #### Instructions Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 20 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 30 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 40 firms. --- ### Graph Description - **Y-axis:** Price (cents per pound) - **X-axis:** Quantity (thousands of pounds) - **Curves/Points:** - **Demand Curve:** A blue straight line descending from the top left to the bottom right. - **Supply Curve (20 firms):** Represented by orange square points. - **Supply Curve (30 firms):** Represented by purple diamond points. - **Supply Curve (40 firms):** Represented by green triangle points. --- ### Questions 1. **If there were 20 firms in this market, the short-run equilibrium price of titanium would be $______ per pound. At that price, firms in this industry would ______. Therefore, in the long run, firms would ______ the titanium market.** 2. **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 titanium industry in long-run equilibrium.** --- ### Help & Feedback If you need further assistance with the homework, feel free to use the help and feedback options available on the platform. --- ### Additional Resources - **Study Tools for Principles of Economics:** Enhance your understanding with extra study tools. - **College Success Tips:** Discover tips to succeed in your academic journey. - **Career Success Tips:** Get advice on building a successful career. Feel free to explore these resources to aid your learning experience. Happy studying!
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