Pure competition in the long run and short run.

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Answer 1

Question

Chapter 11, Problem 1DQ

To determine

Pure competition in the long run and short run.

Expert Solution & Answer

Explanation of Solution

During a short run, the industry will have a precise number of companies. All of these will have a plant size that is set and is not in a position to be altered as it is there for a short run. Firms might shut down given the impression that it won't be making commodities during the short run, but they will not have adequate time to pay off its due obligations and their business will eventually close down.

In contrast, the industry, during the long run will have companies that are already in it and have ample time to either expand or minimize their size. Also, the company numbers in the industry can go up or come down as new companies enter or already present firms leave.

Economics Concept Introduction

Concept Introduction:

Pure Competition: In pure competition, the number of buyers and sellers are large. They are selling homogenous products. Price is fixed by the market force. An individual producer or consumer cannot influence the price. There is no restriction for entry or exit, in the business. Consumers and producers are well aware of the market situation.

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Students have asked these similar questions

Short Description Fiscal Policy Graph Details Shown is a Fiscal Policy diagram with the variable Real GDP (billions of dollars) on the x-axis and the variable Price Level on the y-axis. The x-axis is scaled from 0 to 800 billion dollars with an increment of 40 billion dollars, and the y-axis is scaled from 30 to 150 units with an increment of 5 units. Object Details On the graph we have:Four Line Objects:An upward sloping Aggregate Supply, AS line with two endpoints:Point 1 at (160, 70)Point 2 at (720, 140)A downward sloping Aggregate Demand, AD1 line with two endpoints:Point 1 at (80, 110)Point 2 at (640, 40)A vertical Long-run Aggregate Supply, LRAS with two endpoints:Point 1 at (400, 145)Point 2 at (400, 30)A downward sloping Aggregate Demand, AD line with two endpoints:Point 1 at (720, 60)Point 2 at (160, 130)Two Reference Points:Lines AS, AD, and LRAS intersect at (400, 100)Lines AS and AD1 intersect at (280, 85) a. How much does aggregate demand need to change to restore the…

Fiscal Policy Graph Details Shown is a Fiscal Policy diagram with the variable Real GDP (billions of dollars) on the x-axis and the variable Price Level on the y-axis. The x-axis is scaled from 0 to 1000 billion dollars with an increment of 50 billion dollars, and the y-axis is scaled from 0 to 180 units with an increment of 10 units. Object Details On the graph we have:Four Line Objects:An upward sloping Aggregate Supply, AS line with two endpoints:Point 1 at (200, 40)Point 2 at (800, 160)A downward sloping Aggregate Demand, AD line with two endpoints:Point 1 at (200, 160)Point 2 at (800, 40)A downward sloping Aggregate Demand, AD1 line with two endpoints:Point 1 at (350, 170)Point 2 at (900, 60)A vertical Long-run Aggregate Supply, LRAS line with two endpoints:Point 1 at (500, 170)Point 2 at (500, 0)Two Reference Points:Lines AS and AD1 intersect at (600, 120)Lines AS, AD, and LRAS intersect at (500, 100) a. How much does aggregate demand need to change to restore the…

a. How much does aggregate demand need to change to restore the economy to its long-run equilibrium? $ billion b. If the MPC is 0.6, how much does government purchases need to change to shift aggregate demand by the amount you found in part a? $ billion Suppose instead that the MPC is 0.95. c. How much does aggregate demand and government purchases need to change to restore the economy to its long-run equilibrium? Aggregate demand needs to change by $ billion and government purchases need to change by $ billion.

Answer 2

Question

Chapter 11, Problem 1DQ

To determine

Pure competition in the long run and short run.

Expert Solution & Answer

Explanation of Solution

During a short run, the industry will have a precise number of companies. All of these will have a plant size that is set and is not in a position to be altered as it is there for a short run. Firms might shut down given the impression that it won't be making commodities during the short run, but they will not have adequate time to pay off its due obligations and their business will eventually close down.

In contrast, the industry, during the long run will have companies that are already in it and have ample time to either expand or minimize their size. Also, the company numbers in the industry can go up or come down as new companies enter or already present firms leave.

Economics Concept Introduction

Concept Introduction:

Pure Competition: In pure competition, the number of buyers and sellers are large. They are selling homogenous products. Price is fixed by the market force. An individual producer or consumer cannot influence the price. There is no restriction for entry or exit, in the business. Consumers and producers are well aware of the market situation.

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Answer 3

Question

Chapter 11, Problem 1DQ

To determine

Pure competition in the long run and short run.

Expert Solution & Answer

Explanation of Solution

During a short run, the industry will have a precise number of companies. All of these will have a plant size that is set and is not in a position to be altered as it is there for a short run. Firms might shut down given the impression that it won't be making commodities during the short run, but they will not have adequate time to pay off its due obligations and their business will eventually close down.

In contrast, the industry, during the long run will have companies that are already in it and have ample time to either expand or minimize their size. Also, the company numbers in the industry can go up or come down as new companies enter or already present firms leave.

Economics Concept Introduction

Concept Introduction:

Pure Competition: In pure competition, the number of buyers and sellers are large. They are selling homogenous products. Price is fixed by the market force. An individual producer or consumer cannot influence the price. There is no restriction for entry or exit, in the business. Consumers and producers are well aware of the market situation.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 11, Problem 1DQ

To determine

Pure competition in the long run and short run.

Expert Solution & Answer

Explanation of Solution

During a short run, the industry will have a precise number of companies. All of these will have a plant size that is set and is not in a position to be altered as it is there for a short run. Firms might shut down given the impression that it won't be making commodities during the short run, but they will not have adequate time to pay off its due obligations and their business will eventually close down.

In contrast, the industry, during the long run will have companies that are already in it and have ample time to either expand or minimize their size. Also, the company numbers in the industry can go up or come down as new companies enter or already present firms leave.

Economics Concept Introduction

Concept Introduction:

Pure Competition: In pure competition, the number of buyers and sellers are large. They are selling homogenous products. Price is fixed by the market force. An individual producer or consumer cannot influence the price. There is no restriction for entry or exit, in the business. Consumers and producers are well aware of the market situation.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 11, Problem 1DQ

To determine

Pure competition in the long run and short run.

Expert Solution & Answer

Explanation of Solution

During a short run, the industry will have a precise number of companies. All of these will have a plant size that is set and is not in a position to be altered as it is there for a short run. Firms might shut down given the impression that it won't be making commodities during the short run, but they will not have adequate time to pay off its due obligations and their business will eventually close down.

In contrast, the industry, during the long run will have companies that are already in it and have ample time to either expand or minimize their size. Also, the company numbers in the industry can go up or come down as new companies enter or already present firms leave.

Economics Concept Introduction

Concept Introduction:

Pure Competition: In pure competition, the number of buyers and sellers are large. They are selling homogenous products. Price is fixed by the market force. An individual producer or consumer cannot influence the price. There is no restriction for entry or exit, in the business. Consumers and producers are well aware of the market situation.

Answer 6

Chapter 11, Problem 1DQ

To determine

Pure competition in the long run and short run.

Expert Solution & Answer

Explanation of Solution

During a short run, the industry will have a precise number of companies. All of these will have a plant size that is set and is not in a position to be altered as it is there for a short run. Firms might shut down given the impression that it won't be making commodities during the short run, but they will not have adequate time to pay off its due obligations and their business will eventually close down.

In contrast, the industry, during the long run will have companies that are already in it and have ample time to either expand or minimize their size. Also, the company numbers in the industry can go up or come down as new companies enter or already present firms leave.

Economics Concept Introduction

Concept Introduction:

Pure Competition: In pure competition, the number of buyers and sellers are large. They are selling homogenous products. Price is fixed by the market force. An individual producer or consumer cannot influence the price. There is no restriction for entry or exit, in the business. Consumers and producers are well aware of the market situation.

Answer 7

Chapter 11, Problem 1DQ

To determine

Pure competition in the long run and short run.

Answer 8

Expert Solution & Answer

Explanation of Solution

During a short run, the industry will have a precise number of companies. All of these will have a plant size that is set and is not in a position to be altered as it is there for a short run. Firms might shut down given the impression that it won't be making commodities during the short run, but they will not have adequate time to pay off its due obligations and their business will eventually close down.

In contrast, the industry, during the long run will have companies that are already in it and have ample time to either expand or minimize their size. Also, the company numbers in the industry can go up or come down as new companies enter or already present firms leave.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Concept Introduction:

Pure Competition: In pure competition, the number of buyers and sellers are large. They are selling homogenous products. Price is fixed by the market force. An individual producer or consumer cannot influence the price. There is no restriction for entry or exit, in the business. Consumers and producers are well aware of the market situation.

Answer 12

Ch. 11.6 - Prob. 1QQ Ch. 11.6 - Prob. 2QQ Ch. 11.6 - Prob. 3QQ Ch. 11.6 - Prob. 4QQ Ch. 11 - Prob. 1DQ Ch. 11 - Prob. 2DQ Ch. 11 - Prob. 3DQ Ch. 11 - Prob. 4DQ Ch. 11 - Prob. 5DQ Ch. 11 - Prob. 6DQ

Pure competition in the long run and short run.

Pure competition in the long run and short run.

Explanation of Solution

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