Economics: Private and Public Choice
16th Edition
ISBN: 9781337642224
Author: James D. Gwartney; Richard L. Stroup; Russell S. Sobel
Publisher: Cengage Learning US
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Question
Chapter 22, Problem 5CQ
To determine
The effects of unanticipated increase of
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In a competitive market with free entry and exit from the market a permanent rise in demand will lead to
Select one or more:
a.
normal profits being made in the long-run
b.
excess profits being made in the short run (before new firms can enter)
c.
entry by new firms
d.
a permanent rise in prices
Multiple choice - microeconomics
43) What will entry into a market by new firms do?
A. It will increase the price of the good
B. It will increase profits of existing firms
C. It will increase the costs of existing firms
D. It will increase the supply of the good.
42) What is one consideration that applies to the analysis of a market over the long run but not to the analysis over the short run?
A. changes in firms’ cost structures
B. changes in the numbers of firms in the market
C. changes in the price of the product
D. changes in firms’ profits
The left graph shows the world market for wheat. The right graph shows the cost curves and the marginal revenue curve of an individual wheat farmer at the initial long-run equilibrium. The world population increases. In the left graph, draw the new demand curve. Label it. Draw the market supply curve that returns the wheat market to its long-run equilibrium. Label it. Draw a point to show the new long-run equilibrium price and quantity. In the right graph, draw a point to show the firm's price and quantity in the long run.
Note:-
Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
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Chapter 22 Solutions
Economics: Private and Public Choice
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- Assume that Vartoli Saadettin decides to start up a peddler's trade. His bench is in a perfectly competitive market and has the following long-run total cost function: LRTC(q) = 80q – 8q² + q³ Vartoli Saadettin also observes that market demand is given by: Q=12500-50P. Note that Q represents the market quantity, including all the other firms in the market.arrow_forwardProcter & Gamble Co. is a major soap producer. All of the following, except one, would shift its supply curve of liquid soap to left . Which is the exception?a. an increase in the price of bar soapb. an increase in the price of a key ingredient of liquid soapc. environmental regulations force Procter & Gamble to use a more costly technology to produce liquid soapd. a decrease in the price of liquid soape. an increase in the wage rate for factory workers who produce liquid soaparrow_forwardplease as soon as possiblearrow_forward
- 1. The market for manicures and other nail treatments is very competitive. How would the following developments affect the number of nail treatments that a typical nail salon wants to supply in the short run? a. Heightened concern about their appearance causes people to want more manicures at a given price. b. The government requires all nail salons to pay a new yearly licensing fee to operate. c. Worse job prospects elsewhere in the economy cause more people to want to become manicurists, causing the wages of manicurists to fall.arrow_forwardexplain your answers in detail and use graphs whenever appropriate: The market for rental cars is very competitive. How would the following developments affect the quantity of car rentals that a typical rental car company wants to supply in the short run? a. With the easing of fears about Covid 19, people are more excited to travel than before. b. Local governments reduce the yearly fee that rental car companies have to pay for their facilities. Note, these fees do not vary with how many cars the company rents. c. Rental car companies have to pay higher wages for their workers. Suppose that initially the market for rental cars is in long-run equilibrium. a. What does the fall in the yearly fee rental car companies have to pay for their facilities do to the profits of a typical rental car company in the short run? b. What will happen to the equilibrium price and quantity of rental cars in the long run? Why? What will happen to the profits of a typical rental car company in the long run?arrow_forwardThe figure below depicts the market supply and demand for the perfectly competitive rollerblade industry. S Price per pair of Rollerblades 1,140 070 50 150 Number of pairs of Rollerblades per week Based on the figure above, if the current quantity demanded of rollerblades is 150 per week, you accurately predict that in the short run, Q Select one: a. price and quantity supplied will increase and quantity demanded will decrease. b. price and quantity supplied will decrease and quantity demanded will increase. c. price, quantity supplied and quantity demanded will increase. d. price, quantity supplied and quantity demanded will decrease.arrow_forward
- The firm's short-run supply curve shows the relationship between the price of a good and the: A. firms capacity output. B. quantity demanded of that good. C. willingness of consumers to purchase a good D. quantity supplied of that good.arrow_forwardA market maker faces the following demand and supply for widgets. Eleven buyers are willing to buy at the following prices: $15, $14, $13, $12, $11, $10, $9, $8, $7, $6, $5. Eleven sellers are also willing to sell at the same prices. If the market maker makes three transactions, what is his total profit? a. $12 b. $15 C. $18 d. $21arrow_forwardwhat is the effect on the market price and output of hambyrgers with reference to the following? A. An increase in the income of consumers B. wide spread disease of beef C. Dramatic improvement in fast food technologyarrow_forward
- What is meant by selling cost? Name one market where selling cost is applicablearrow_forwardThe pen industry is an increasing cost industry. If a pen is an inferior good, and consumer's incomes permanently increase, the equilibrium price of a pen ____ in the long run, the equilibrium quantity of pens ______in the long run, and the number of firms in the market ____ in the long run. Word Bank: Decreases, Decreases, Decreases, Increases, Increases, Increases, does not change, does not change, does not change.arrow_forwardA firm in a perfectly competitive market a. can increase its supply to lower the market price. b. can raise the price of its product and sell more output. C. can decrease its supply to increase the market price. d. has to accept the market price for its product. e. has to lower the price of its product to sell more output.arrow_forward
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