Homework Help is Here – Start Your Trial Now!
Business
Economics
Consider the competitive market for steel. 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 (Dolars per ton) PRICE (Dolars per ton) 88 g 30 2 8 10 20 O 10 0 The following graph shows the market demand for steel. 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 30 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 40 firms. MCO ATC D O S 10 15 AVC 35 QUANTITY (Thousands of tons) 40 Qemand 250 375 500 925 750 8/5 1000 1125 1250 QUANTITY (Thousands of tons) 0 Supply (20firms) Supply (30 femms) Supply (40 firmes) If there were 20 firms in this market, the short-run equilibrium price of steel would be Therefore, in the long run, firms would per ton. At that price, firms in this industry would the steel market. Because you know that competitive firms eam_ 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.

Consider the competitive market for steel. 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 (Dolars per ton) PRICE (Dolars per ton) 88 g 30 2 8 10 20 O 10 0 The following graph shows the market demand for steel. 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 30 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 40 firms. MCO ATC D O S 10 15 AVC 35 QUANTITY (Thousands of tons) 40 Qemand 250 375 500 925 750 8/5 1000 1125 1250 QUANTITY (Thousands of tons) 0 Supply (20firms) Supply (30 femms) Supply (40 firmes) If there were 20 firms in this market, the short-run equilibrium price of steel would be Therefore, in the long run, firms would per ton. At that price, firms in this industry would the steel market. Because you know that competitive firms eam_ 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.

Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter14: Firms In Competitive Markets
Section: Chapter Questions
Problem 4PA
See similar textbooks
icon
Related questions
Question
Homework Consider the competitive market for steel. 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 ton) PRICE (Dollars per ton) 100 90 70 80 50 40 30 100 20 90 0 80 70 60 50 40 30 20 The following graph shows the market demand for steel. 0 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 30 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 40 firms. D MC D ATC AVC D O 5 10 15 20 25 35 QUANTITY (Thousands of tons) Demand 50 250 375 500 750 875 1000 1125 1250 QUANTITY (Thousands of tons) 0 Supply (20 firms) Supply (30 firms) 4 Supply (40 firms) If there were 20 firms in this market, the short-run equilibrium price of steel would be . Therefore, in the long run, firms would ? per ton. At that price, firms in this industry would the steel market. Because you know that competitive firms ear 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.
Transcribed Image Text:Homework Consider the competitive market for steel. 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 ton) PRICE (Dollars per ton) 100 90 70 80 50 40 30 100 20 90 0 80 70 60 50 40 30 20 The following graph shows the market demand for steel. 0 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 30 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 40 firms. D MC D ATC AVC D O 5 10 15 20 25 35 QUANTITY (Thousands of tons) Demand 50 250 375 500 750 875 1000 1125 1250 QUANTITY (Thousands of tons) 0 Supply (20 firms) Supply (30 firms) 4 Supply (40 firms) If there were 20 firms in this market, the short-run equilibrium price of steel would be . Therefore, in the long run, firms would ? per ton. At that price, firms in this industry would the steel market. Because you know that competitive firms ear 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.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 2 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Market Price
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Economics, 7th Edition (MindTap Cou…
Principles of Economics, 7th Edition (MindTap Cou…
Economics
ISBN:
9781285165875
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
Economics
ISBN:
9781337091992
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Economics:
Economics:
Economics
ISBN:
9781285859460
Author:
BOYES, William
Publisher:
Cengage Learning
Principles of Economics 2e
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax
Economics (MindTap Course List)
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS