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 candisregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use thepurple points (diamond symbol) to plot the short-run industry supply curve when there are 40 firms. Finally, use the green points (triangle symbol) toplot the short-run industry supply curve when there are 60 firms.8072Supply (20 firms)6456Demand48Supply (40 firms)Supply (60 firms)168120240 300480600720 840980 1080 1200QUANTITY (Thousands of tons)If there were 60 firms in this market, the short-run equilibrium price of steel would be $per ton. At that price, firms in this industry wouldv . Therefore, in the long run, firms wouldv the steel market,Because you know that perfectly competitive firms earnv economic profit in the long run, you know the long-run equilibrium price mustbe sper ton. From the graph, you can see that this means there will be v firms operating in the steel industry in long-run equilibrium.PRICE (Dollars per ton) 6. Short-run supply and long-run equilibriumConsider the perfectly competitive market for steel. Assume that, regardless of how many firms are in the industry, every firm in the industry isidentical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph.(?)80726456ATC4840322418AVC8MC O12 1518 21 24 2730QUANTITY (Thousands of tons)COSTS (Dollars per ton)3.

Note: Since the question has more than three sub-questions, we are restricted to answer not more…

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 40 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 60 firms. 80 72 Supply (20 firms) 64 56 Demand 48 Supply (40 firms) 40 32 Supply (60 firms) 24 18 120 240 380 480 600 720 840 960 1080 1200 QUANTITY (Thousands of tons) per ton. At that price, firms in this industry would If there were 60 firms in this market, the short-run equilibrium price of steel would be s . Therefore, in the long run, firms would the steel market. Because you know that perfectly competitive firms earn economic profit in the long run, you know the long-run equilibrium price must be s per ton. From the graph, you can see that this means there will be firms operating in the steel industry in long-run equilibrium. PRICE (Dollars per ton)

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 40 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 60 firms. 80 72 Supply (20 firms) 64 56 Demand 48 Supply (40 firms) 40 32 Supply (60 firms) 24 18 120 240 380 480 600 720 840 960 1080 1200 QUANTITY (Thousands of tons) per ton. At that price, firms in this industry would If there were 60 firms in this market, the short-run equilibrium price of steel would be s . Therefore, in the long run, firms would the steel market. Because you know that perfectly competitive firms earn economic profit in the long run, you know the long-run equilibrium price must be s per ton. From the graph, you can see that this means there will be firms operating in the steel industry in long-run equilibrium. PRICE (Dollars per ton)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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