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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. 100 90 Supply (10 firms) 80 70 60 Supply (15 firms) 50 40 Supply (20 firms) Demand 30 20 10 125 250 375 500 625 750 875 1000 1125 1250 QUANTITY (Thousands of pounds) If there were 10 firms in this market, the short-run equilibrium price of copper would be $ per pound. At that price, firms in this industry would Therefore, in the long run, firms would ▼ the copper market. Because you know that perfectly 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 v firms operating in the copper industry in long-run equilibrium. PRICE (Dollars per pound)

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. 100 90 Supply (10 firms) 80 70 60 Supply (15 firms) 50 40 Supply (20 firms) Demand 30 20 10 125 250 375 500 625 750 875 1000 1125 1250 QUANTITY (Thousands of pounds) If there were 10 firms in this market, the short-run equilibrium price of copper would be $ per pound. At that price, firms in this industry would Therefore, in the long run, firms would ▼ the copper market. Because you know that perfectly 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 v firms operating in the copper industry in long-run equilibrium. PRICE (Dollars per pound)

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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The image illustrates a graph depicting cost curves in a perfectly competitive market for copper. It assumes that each firm in the industry is identical, facing the Marginal Cost (MC), Average Total Cost (ATC), and Average Variable Cost (AVC) curves. ### Graph Explanation: - **Axes**: - The horizontal axis represents the quantity of copper in thousands of pounds (ranging from 0 to 100). - The vertical axis shows the cost in dollars per pound (ranging from 0 to 100). - **Curves**: - **MC (Marginal Cost)**: Shown by the orange curve. It slopes downward initially and then rises steeply after the minimum point. - **ATC (Average Total Cost)**: The green curve. It initially decreases, reaches a minimum, and then increases. It lies above the AVC curve. - **AVC (Average Variable Cost)**: Represented by the purple curve. This curve also shows a decrease followed by an increase, lying below the ATC. The curves' intersections indicate different cost relationships, crucial for understanding production decisions in a perfectly competitive market. The following sections typically would delve into market demand details for copper, as hinted at the end of the image's text.
Transcribed Image Text:The image illustrates a graph depicting cost curves in a perfectly competitive market for copper. It assumes that each firm in the industry is identical, facing the Marginal Cost (MC), Average Total Cost (ATC), and Average Variable Cost (AVC) curves. ### Graph Explanation: - **Axes**: - The horizontal axis represents the quantity of copper in thousands of pounds (ranging from 0 to 100). - The vertical axis shows the cost in dollars per pound (ranging from 0 to 100). - **Curves**: - **MC (Marginal Cost)**: Shown by the orange curve. It slopes downward initially and then rises steeply after the minimum point. - **ATC (Average Total Cost)**: The green curve. It initially decreases, reaches a minimum, and then increases. It lies above the AVC curve. - **AVC (Average Variable Cost)**: Represented by the purple curve. This curve also shows a decrease followed by an increase, lying below the ATC. The curves' intersections indicate different cost relationships, crucial for understanding production decisions in a perfectly competitive market. The following sections typically would delve into market demand details for copper, as hinted at the end of the image's text.
**Educational Text for Website:** **Supply and Demand Analysis in a Competitive Market** 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. **Graph Explanation:** - **Axes:** - The horizontal axis represents Quantity (Thousands of pounds). - The vertical axis represents Price (Dollars per pound). - **Demand Curve:** - It is a downward-sloping line indicating the relationship between the price of copper and the quantity demanded. - **Legend:** - **Orange squares** mark the supply line for 10 firms. - **Purple diamonds** indicate the supply line for 15 firms. - **Green triangles** represent the supply line for 20 firms. **Analytical Questions:** - If there were 10 firms in this market, the short-run equilibrium price of copper would be ____ per pound. At that price, firms in this industry would _______. Therefore, in the long run, firms would __________ the copper market. - Because you know that perfectly 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 copper industry in long-run equilibrium. This exercise helps illustrate the impact of firm numbers on the supply curve in a competitive market and the determination of short-run and long-run equilibria.
Transcribed Image Text:**Educational Text for Website:** **Supply and Demand Analysis in a Competitive Market** 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. **Graph Explanation:** - **Axes:** - The horizontal axis represents Quantity (Thousands of pounds). - The vertical axis represents Price (Dollars per pound). - **Demand Curve:** - It is a downward-sloping line indicating the relationship between the price of copper and the quantity demanded. - **Legend:** - **Orange squares** mark the supply line for 10 firms. - **Purple diamonds** indicate the supply line for 15 firms. - **Green triangles** represent the supply line for 20 firms. **Analytical Questions:** - If there were 10 firms in this market, the short-run equilibrium price of copper would be ____ per pound. At that price, firms in this industry would _______. Therefore, in the long run, firms would __________ the copper market. - Because you know that perfectly 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 copper industry in long-run equilibrium. This exercise helps illustrate the impact of firm numbers on the supply curve in a competitive market and the determination of short-run and long-run equilibria.
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