Macmillan Learr2100102030 40 50 60Quantity (in thousands)The demand shift results inDemand1Demand270 80 90 100a short-run economic loss for the firm.a long-run economic profit for the firm.O a short-run economic proft of 0.O a short-run economic profit for the firm.Long-run equilibrium is restored in this industry when210010MC203040 50 60Quantity7080O short-run economic losses cause resources to flow to other industries. In the long run, firms exit the industry,reducing market price and driving economic profit to 0. Long-run equilibrium is restored whenP = LRAC = SRATC = MC.90short-run economic profits attract resources. In the long run, firms enter the industry, reducing market price anddriving economic profit to 0. Long-run equilibrium is restored when P = LRAC = SRATC = MC.short-run economic profits attract resources. In the long run, firms enter the industry, reducing market price anddriving economic profit to 0. Long-run equilibrium is restored when P > LRAC = SRATC = MC.O short-run economic losses attract resources. In the long run, firms enter the industry, increasing market price anddriving economic profit to 0. Long-run equilibrium is restored when P = LRAC = SRATC = MC.100 Macmillan LearningConsider the graphs of a constant cost industry and a perfectly competitive firm within it. Initially, the industry is in long-runequilibrium at point E, then demand shifts from Demand1 to Demand2. Answer the questions where P is the price, MR is themarginal revenue, AR is the average revenue, MC is the marginal cost, SRATC is the short-run average total cost, and LRACis the long-run average total cost.Manipulate both of the graphs to reflect the adjustments that yield the long-run equilibrium.Price ($)1098765432100 10209876XX53MC21E6030 40 50Quantity (in thousands)The demand shift results in70Supplya short-run economic loss for the firm.Demand1 Demand21080 90 100001020SRATC3040 50 60Quantity7080LRACP=MR=A90 100

Long-run equilibrium is a state in which an industry or market has reached a stable equilibrium…

The demand shift results in a short-run economic loss for the firm. O a long-run economic profit for the firm. a short-run economic proft of 0. O a short-run economic profit for the firm. Long-run equilibrium is restored in this industry when short-run economic losses cause resources to flow to other industries. In the long run, firms exit the industry, reducing market price and driving economic profit to 0. Long-run equilibrium is restored when P = LRAC = SRATC = MC. short-run economic profits attract resources. In the long run, firms enter the industry, reducing market price and driving economic profit to 0. Long-run equilibrium is restored when P = LRAC = SRATC = MC. short-run economic profits attract resources. In the long run, firms enter the industry, reducing market price and driving economic profit to 0. Long-run equilibrium is restored when P > LRAC = SRATC = MC. short-run economic losses attract resources. In the long run, firms enter the industry, increasing market price and driving economic profit to 0. Long-run equilibrium is restored when P = LRAC = SRATC = MC.

The demand shift results in a short-run economic loss for the firm. O a long-run economic profit for the firm. a short-run economic proft of 0. O a short-run economic profit for the firm. Long-run equilibrium is restored in this industry when short-run economic losses cause resources to flow to other industries. In the long run, firms exit the industry, reducing market price and driving economic profit to 0. Long-run equilibrium is restored when P = LRAC = SRATC = MC. short-run economic profits attract resources. In the long run, firms enter the industry, reducing market price and driving economic profit to 0. Long-run equilibrium is restored when P = LRAC = SRATC = MC. short-run economic profits attract resources. In the long run, firms enter the industry, reducing market price and driving economic profit to 0. Long-run equilibrium is restored when P > LRAC = SRATC = MC. short-run economic losses attract resources. In the long run, firms enter the industry, increasing market price and driving economic profit to 0. Long-run equilibrium is restored when P = LRAC = SRATC = MC.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter12: The Partial Equilibrium Competitive Model

Section: Chapter Questions

Problem 12.4P

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