7. Short-run supply and long-run equilibriumConsider the competitive market for ruthenium. Assume that no matter how many firms operate in the industry, every firm is identical and faces thesame marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves plotted in the following graph.COSTS (Dollars per pound)8072645616800 3MCATCOAVC☐06 9 12 15 18 21QUANTITY (Thousands of pounds)242730The following graph plots the market demand curve for ruthenium.(?)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 candisregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use thepurple points (diamond symbol) to plot the short-run industry supply curve when there are 20 firms. Finally, use the green points (triangle symbol) toplot the short-run industry supply curve when there are 30 firms. 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 candisregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use thepurple points (diamond symbol) to plot the short-run industry supply curve when there are 20 firms. Finally, use the green points (triangle symbol) toplot the short-run industry supply curve when there are 30 firms.PRICE (Dollars per pound)80726456322416800 120 240 360 480 600 720 840 960 1080 1200QUANTITY (Thousands of pounds)Demandequilibrium.CSupply (10 firms)O TrueSupply (20 firms)ASupply (30 firms)If there were 10 firms in this market, the short-run equilibrium price of ruthenium would be $would▼. Therefore, in the long run, firms would(?)Because you know that competitive firms earn▼ economic profit in the long run, you know the long-run equilibrium price must beper pound. From the graph, you can see that this means there will be firms operating in the ruthenium industry in long-run$per pound. At that price, firms in this industrythe ruthenium market.True or False: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns positive accounting profit.

Market demand means the quantity of goods that all the consumers in a market are willing and able to…

If there were 10 firms in this market, the short-run equilibrium price of ruthenium would be $ would Therefore, in the long run, firms would Because you know that competitive firms earn economic profit in the long run, you know the long-run equilibrium price must be per pound. From the graph, you can see that this means there will be firms operating in the ruthenium industry in long-run $ equilibrium. per pound. At that price, firms in this industry the ruthenium market. True or False: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns positive accounting profit. O True

If there were 10 firms in this market, the short-run equilibrium price of ruthenium would be $ would Therefore, in the long run, firms would Because you know that competitive firms earn economic profit in the long run, you know the long-run equilibrium price must be per pound. From the graph, you can see that this means there will be firms operating in the ruthenium industry in long-run $ equilibrium. per pound. At that price, firms in this industry the ruthenium market. True or False: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns positive accounting profit. O True

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Firms In Competitive Markets

Section: Chapter Questions

Problem 8PA

See similar textbooks

Similar questions

Suppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + q2 Marginal cost: MC = q where q is an individual firms quantity produced. The market demand curve for this product is Demand:QD = 120 P where P is the price and Q is the total quantity of the good. Currently, there are 9 firms in the market. a. What is each firms fixed cost? What is its variable cost? Give the equation for average total cost. b. Graph average-total-cost curve and the marginal-cost curve for q from 5 to 15. At what quantity is average-total-cost curve at its minimum? What is marginal cost and average total cost at that quantity? c Give the equation for each firms supply curve. d. Give the equation for the market supply curve for the short run in which the number of firms is fixed. e. What is the equilibrium price and quantity for this market in the short run? f. In this equilibrium, how much does each firm produce? Calculate each firms profit or loss. Is there incentive for firms to enter or exit? g. In the long run with free entry and exit, what is the equilibrium price and quantity in this market? h. In this long-run equilibrium, how much does each firm produce? How many firms are in the market?
A computer company produces affordable, easy-to-use home computer systems and has fixed costs of 250. The marginal cost of producing computers is 700 for the first computer, 250 for the second, 300 for the third, 350 for the fourth, 430 for the fifth, 450 for the sixth, and 500 for the seventh. Create a table that shows the companys output, total cost, marginal cost, average cost, variable cost, and average variable cost. At what price is the zero-profit point? At what price is the shutdown point? If the company sells the computers for 500, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss. If the firm sells the computers for 300, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss.
Why will profits for films in a perfectly competitive industry tend to vanish in the long run?
How does the average cost curve help to show whether a firm is making profits or losses?
What is a price taker firm?
Why will firms in most markets be located at or close to the bottom of the long-run avenge cost me?
A market in perfect competition is in long-run equilibrium. What happens to the market if labor unions are able to increase wages for workers?
Productive efficiency and allocative efficiency are two concepts achieved in the long mm in a perfectly competitive market. These are the two reasons why we call them perfect. How would you use these two concepts to analyze other market structures and label them imperfect?