10 The industry in the figure given below on the left consists of many firms with identical cost structures, and the industry experiences constant returns to scale. a. Draw the short-run market supply curve up to 4,000 units of output. Instructions: Use the tool provided (SRMSC) to draw the short-run market supply curve. Plot three points total. b. Draw the long-run market supply curve from zero to 4,000 units of output. Instructions: Use the tool provided (LRMSC) tool to draw the long-run market supply curve. Plot only the endpoints across the entire output range (0 to 4,000). Typical Firm Price ($) 50 40 Market Price ($) 50 MC ATC 40 30 AVC 20 10 30 20 10 0 10 20 30 40 50 Quantity D 1000 2000 3000 4000 5000 Quantity Tools LRMSC SRMSC

10 The industry in the figure given below on the left consists of many firms with identical cost structures, and the industry experiences constant returns to scale. a. Draw the short-run market supply curve up to 4,000 units of output. Instructions: Use the tool provided (SRMSC) to draw the short-run market supply curve. Plot three points total. b. Draw the long-run market supply curve from zero to 4,000 units of output. Instructions: Use the tool provided (LRMSC) tool to draw the long-run market supply curve. Plot only the endpoints across the entire output range (0 to 4,000). Typical Firm Price ($) 50 40 Market Price ($) 50 MC ATC 40 30 AVC 20 10 30 20 10 0 10 20 30 40 50 Quantity D 1000 2000 3000 4000 5000 Quantity Tools LRMSC SRMSC

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter12: Firms In Perfectly Competitive Markets

Section: Chapter Questions

Problem 14P

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The industry in the figure below consists of many firms with identical cost structures, and the industry experiences constant returns to scale. Consider a change in demand from D₁ to D₂, which increases price from $20 to $30 in the short run. Price (S) 50 40- 30- 20 10- 0 10 20 Market 30 B Quantity reset D 40 5 50 LRS 1 S₂ Instructions: Round your answers to the nearest whole number. a. Draw the new supply line that occurs after the market adjustments take place. Instructions: Use the tool provided (S₂) and plot only the endpoints. The new equilibrium price will be $ b. Draw the long-run supply curve. Instructions: Use the tool provided (LRS) and plot only the endpoints over the entire range of output (0 - 60). and the new equilibrium quantity will be
Figure 14-13 Suppose a firm in a competitive industry has the following cost curves: 10 9- 8 7. 6 اکیه 3.5 2 1- Price 1 2 3 4 MC 5 6 7 8 ATC AVC Refer to Figure 14-13. If the price is $2 in the short run, what will happen in the long run? ◆a. Individual firms will earn positive economic profits in the short run, which will entice other firms to enter the industry. b. Nothing. The price is consistent with zero economic profits, so there is no incentive for firms to enter or exit the industry. ● C. Individual firms will earn negative economic profits in the short run, which will cause some firms to exit the industry. d. Because the price is below the firm's average variable costs, the firms will shut down. 45
The let 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 >>>Draw only the objects specified in the question 16 124 Price (dollars per bushel) 10 P₁ 05 10 15 20 25 30 35 40 Quantity (bons of bushels per year) C Price and cost (dollars per bushel) 20 MC 10 ATC 124 M 10 MAR 200 650 100 150 200 250 300 350 400 Quantity (thousands of bushels per year) 0 a 3
Question 14 Below, the graph on the left shows the long-run average and marginal cost for a typical firm in a perfectly competitive industry. The graph on the right shows demand and long-run supply for the industry. LMC, LAC Price and cost (dollars) 40 P LMC 40 35 LAC 30 25 Vix 20 15 10 35 30 25 20 15 10 5 0 $15; 250 $15; 400 $35; 250 Price and cost (dollars) 100 200 300 400 500 Firm's output Industry output Long-run equilibrium occurs because of the entry of new firms into the industry or the exit of existing firms from the industry. In the above industry, long-run equilibrium occurs at a price of and output of $35; 400 LO 5 0 S D
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Here is an industry in long run equilibrium. What is profit in this industry when demand is at D1? COST 100 80 60 Cost for ONE Firm in Competitive Industry 800 1000 Find Profit: MC ATC Q P Market in Industry D1 100,000 80,000 SSHORT RUN DO SLONG RUN O
Consider the competitive market for rhodium. Assume that no matter how many firms operate in the industry, every firm is identical and faces the same marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves plotted in the following graph. COSTS (Dollars per pound) 80 2233 22 72 64 56 80 48 72 64 56 48 40 00 32 24 16 0 0 MCD ATC Demand 0 AVC The following graph plots the market demand curve for rhodium. -0. ☐ 3 6 9 12 15 18 21 QUANTITY (Thousands of pounds) D 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 20 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 30…
Price A B C A Cannot be determined C B The graph above depicts the demand, short-run industry supply curve and the long- run industry supply curve. Which line represents the long-run industry supply curve? Quantity
Figure 1 shows the short-run cost curves of a toy producer. The market has 1,000 identical producers and Table 1 shows the market demand schedule for toys. At what market prices would the firm shut down temporarily? What is the market price of a toy in long-run equilibrium? How many firms will be in the toy market in the long run? Explain your answer.
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16. The firm in the figure represents the cost structure for all firms in the industry. Describe the steps that will lead to long-run equilibrium in this market.