In both price-taker and competitive price-searcher markets, a decrease in market demand will lead to: price higher than marginal revenue when short-run losses are minimized. an increase in the prices firms receive for their products. short-run economic profits and the entry of firms in the long run. output contraction and firms going out of business in the long run.
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- 7. Short-run supply and long-run equilibrium Consider the perfectly competitive market for copper. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. COSTS (Dollars per kilogram) 80 72 64 56 48 40 32 16 8 0 0 4 MC 8 ATC AVC □ 12 16 20 24 28 32 QUANTITY (Thousands of kilograms) 36 The following diagram shows the market demand for copper. □ 40 ? 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…price elasticity of supply in the short run and long run Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.Answer completely.You will get up vote for sure.industry has 1000 competitive firms, each producing 50 tons of output. At the current market price of $10, half of the firms have a short-run supply curve with a slope of 1; the other half each have a short-run supply curve with slope 2. The short-run elasticity of market supply is a) 3/10 b) 1/5 c) 2/5 d) none of the above
- 27) A firm in a perfectly competitive market has no control over price because A) there is free entry and exit from the industry. B) every firm's product is a perfect substitute for every other firm's product, and there is a very large number of firms in the industry. C) the government imposes price ceilings on the products produced in perfectly competitive industries. D) the market demand for products produced in perfectly competitive industries is perfectly elastic.5. Short-run equilibrium Consider a perfectly competitive market for wheat in Chicago. There are 120 firms in the industry, each of which has the cost curves shown on the following graph: (? 100 90 MC 80 70 60 ATC 50 40 30 AVC 20 10 10 15 20 25 30 35 40 45 50 OUTPUT (Thousands of bushels) COST (Cents per bushel)M/c question - Micro 31) Refer to Figure 14-13. When a firm in a competitive market, like the one depicted in panel (a), observes market price rising from P1 to P2, what is most likely the cause? A. the exit of existing firms in the market B. an increase in market supply from Supply0 to Supply1 C. the entrance of new firms into the market D. an increase in market demand from Demand0 to Demand1 30) A profit-maximizing firm in a competitive market discovers that, at its current level of production, price is greater than marginal cost. What should it do? A. It should increase its output. B. It should reduce its output but continue operating. C. It should shut down. D. It should keep output the same.
- PRICE (Dollars per ton) 80 72 64 56 48 40 32 24 16 8 0 0 Demand 120 240 360 480 600 720 840 960 1080 1200 QUANTITY (Thousands of tons) Supply (20 firms) Supply (40 firms) Supply (60 firms) True False (?) 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 would Therefore, in the long run, firms would the steel market. Because you know that competitive firms earn economic profit in the long run, you know the long-run equilibrium price must be $ per ton. From the graph, you can see that this means there will be firms operating in the steel industry in long-run equilibrium. True or False: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns positive accounting profit.In short-run supply adjustment, any increase in quantity brought to the marketplace is due to existing firms expanding output. False True1. A firm in a perfectly competitive industry has fixed costs of FC = 15, marginal costs of MC = 5+ 14q, and average variable costs of AVC = 5 + 7q.
- $ per Unit of Output q Quantity AC AVC MR $ per Unit of Output Quantity D In the long run, we should expect: businesses to enter the industry, market supply to increase, and product price to fall businesses to leave the industry, market supply to decrease, and product price to rise businesses to leave the industry, market supply to increase, and product price to rise no change in the number of businesses in this industry businesses to enter the industry, market supply to decrease, and product price to risePRICE (Dollars per pound) 2 72 64 56 48 40 32 2 16 0 0 120 Demand Because you know that competitive firms earn $ 000 1080 1200 240 360 460 600 720 640 QUANTITY (Thousands of pounds). True False -0 Supply (10 firms) $ Supply (20 firms) -A If there were 10 firms in this market, the short-run equilibrium price of rhodium would be s would Therefore, in the long run, firms would Supply (30 firms) per pound. From the graph, you can see that this means there will be © per pound. At that price, firms in this industry the rhodium market. economic profit in the long run, you know the long-run equilibrium price must be firms operating in the rhodium industry in long-run equilibrium. True or False: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns positive accounting profit. ContinueQuestion 2 A university is planning to install many mini steel structures within the campus. Three companies have provided their quotation to get the job with below variable and fixed cost. For up to 20,000 units per year, determine what ranges of supply (annual supply) each quotation would be suitable. Provide justification of your answer. Quotation A: has annual variable cost $20 with annual fixed cost $100000 Quotation B: has annual variable cost $5 with annual fixed cost $200000 Don't ignore any part all part work u