Microeconomics (13th Edition)
13th Edition
ISBN: 9780134744476
Author: Michael Parkin
Publisher: PEARSON
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Chapter 12.5, Problem 1RQ
To determine
What happens to output, price, and economic profit in the short run and in long run when the
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1. The market for manicures and other nail treatments is very competitive. How would the following developments affect the number of nail treatments that a typical nail salon wants to supply in the short run?
a. Heightened concern about their appearance causes people to want more manicures at a given price.
b. The government requires all nail salons to pay a new yearly licensing fee to operate.
c. Worse job prospects elsewhere in the economy cause more people to want to become manicurists, causing the wages of manicurists to fall.
60. In a perfectly competitive market, which of the following will increase the economic profit the firms make in the short run?
A. an increase in labor costs
B. a decrease in market demand
C. an increase in market demand
D. an increase in the number of firms
10. Price elasticity of supply in the short run and long run
The following graph shows the short-run supply curve for pecans.
Place the orange line (square symbol) on the following graph to show the most likely long-run supply curve for pecans. (Note: Place the points of the
line either on R and U or on R and X.)
PRICE (Dollars per pound)
24
20
16
12
R
Short-Run Supply
10
QUANTITY (Thousands of pounds of pecans)
12
Long-Run Supply
?
Chapter 12 Solutions
Microeconomics (13th Edition)
Ch. 12.1 - Prob. 1RQCh. 12.1 - Prob. 2RQCh. 12.1 - Prob. 3RQCh. 12.1 - Prob. 4RQCh. 12.2 - Prob. 1RQCh. 12.2 - Prob. 2RQCh. 12.2 - Prob. 3RQCh. 12.3 - Prob. 1RQCh. 12.3 - Prob. 2RQCh. 12.3 - Prob. 3RQ
Ch. 12.4 - Prob. 1RQCh. 12.4 - Prob. 2RQCh. 12.5 - Prob. 1RQCh. 12.5 - Prob. 2RQCh. 12.5 - Prob. 3RQCh. 12.6 - Prob. 1RQCh. 12.6 - Prob. 2RQCh. 12.6 - Prob. 3RQCh. 12.6 - Prob. 4RQCh. 12 - Prob. 1SPACh. 12 - Prob. 2SPACh. 12 - Prob. 3SPACh. 12 - Prob. 4SPACh. 12 - Prob. 5SPACh. 12 - Prob. 6SPACh. 12 - Prob. 7SPACh. 12 - Prob. 8SPACh. 12 - Prob. 9SPACh. 12 - Prob. 10APACh. 12 - Prob. 11APACh. 12 - Prob. 12APACh. 12 - Prob. 13APACh. 12 - Prob. 14APACh. 12 - Prob. 15APACh. 12 - Prob. 16APACh. 12 - Prob. 17APACh. 12 - Prob. 18APACh. 12 - Prob. 19APACh. 12 - Prob. 20APACh. 12 - Prob. 21APACh. 12 - Prob. 22APACh. 12 - Prob. 23APA
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- In a competitive market with free entry and exit from the market a permanent rise in demand will lead to Select one or more: a. normal profits being made in the long-run b. excess profits being made in the short run (before new firms can enter) c. entry by new firms d. a permanent rise in pricesarrow_forward10. Price elasticity of supply in the short run and long run The following graph shows the short-run supply curve for pecans. Place the orange line (square symbol) on the following graph to show the most likely long-run supply curve for pecans. (Note: Place the points of the line either on N and G or on N and Z.) PRICE (Dollars per pound) 24 20 16 2 to 2 4 N 6 8 10 QUANTITY (Thousands of pounds of pecans) ✓ □G Short-Run Supply 12 Long-Run Supply (?)arrow_forwardCo Assignment Content 1) When the Price is $4 the quantity supplied of hats is 100. If the price changes to $6 dollars and the quantity supplied changes to 400, is the elasticity of supply elastic, inelastic or unit elastic? How did you reach that conclusion? 2) Why will economic profits for firms in a perfectly competitive industry tend to vanish in the long run? What about accounting AS 12arrow_forward
- 15. Firms in a market are earning normal profits. Demand falls and the market price follows. Explain whether the firm continues to produce the same amount, cuts back and continues to produce, or stops producing and gets out of the business. Explain your logic.arrow_forward8. Price elasticity of supply in the short run and long run The following graph shows the long-run supply curve for pecans. Place the orange line (square symbol) on the following graph to show the most likely short-run supply curve for pecans. (Note: Place the points of the line either on O and D or on O and S.) PRICE (Dollars per pound) 3 20 10 2 0 D Long-Run Supply 8 10 QUANTITY (Thousands of pounds of pecans) 12 0 Short-Run Supply ?arrow_forward5. Price elasticity of supply in the short run and long run The following graph shows the short-run supply curve for apricots. Place the orange line (square symbol) on the graph to show the most likely long-run supply curve for apricots. (Note: Place the points of the line either on E and D or on E and C.) PRICE (Dollars per pound) 12 10 8 2 0 0 2 4 с 8 10 QUANTITY (Thousands of pounds of apricots) O Short-Run Supply 6 12 Long-Run Supply ?arrow_forward
- 10. Price elasticity of supply in the short run and long run The following graph shows the short-run supply curve for pecans. Place the orange line (square symbol) on the following graph to show the most likely long-run supply curve for pecans. (Note: Place the points of the line either on M and R or on M and W.) PRICE (Dollars per pound) 2 8 16 12 M 0, R Short-Run Supply 1 Long-Run Supply ?arrow_forward(J) Canadian red wheat is a normal good, in a perfectly competitive market which is in long run equilibrium. There occurs a boon in the economy and income rises. What effect does this have on short run equilibrium price and equilibrium quantity? Draw a short run industry graph showing the change described above. Remember to label every curve, label your axes, and demonstrate the resulting changes in the axes.arrow_forward7. Study Questions and Problems #7 Use the data from the following demand schedule to answer the questions that follow. Price (P) (Dollars) Total Revenue (TR) Marginal Revenue (MR) Quantity Demanded (Q) (Dollars) (Dollars) 20.00 0 0.00 18.00 18.00 1 18.00 14.00 16.00 2 32.00 10.00 14.00 3 42.00 6.00 12.00 4 48.00 2.00 10.00 5 50.00 -2.00 8.00 6 48.00 -6.00 6.00 7 42.00 -10.00 4.00 8 32.00 -14.00 2.00 9 18.00 -18.00 0.00 10 0.00 Make the unrealistic assumption that production is costless for the monopolist in this question. The monopolist will charge a price of $ for the monopolist. per unit and sell units. This will yield an economic profit of S Now assume the marginal cost is above zero and is equal to the marginal revenue of the fourth unit. The monopolist will now charge monopolist will now earn price and produce when production was costless. In turn, the economic profit compared to when production was costless.arrow_forward
- 10. Price elasticity of supply in the short run and long run The following graph shows the long-run supply curve for pecans. Place the orange line (square symbol) on the following graph to show the most likely short-run supply curve for pecans. (Note: Place the points of the line either on Y and V or on Y and S.) PRICE (Dollars per pound) 24 20 16 12 co 0 0 D 4 ● S OL Long-Run Supply 2 6 8 10 QUANTITY (Thousands of pounds of pecans) 12 Short-Run Supplyarrow_forward2. The demand curve facing a competitive firm The following graph shows the daily market for large cardboard boxes in Dallas. 40 36 Demand 32 Supply 28 24 8 4 3 4 6 7 8 10 QUANTITY (Millions of large boxes) PRICE (Dollars per large box)arrow_forward14. Profit maximization and shutting down in the short run The following graph plots daily cost curves for a firm operating in the competitive market for fitness trackers. PRICE (Dollars per tracker) 8888888 20 10 ATC MC AVC 10 20 30 40 50 GO 70 00 90 100 QUANTITY (Thousands of tracker) Using the following table, for each price level, calculate the optimal quantity of units for the firm to produce. Using the data from the graph to determine the firm's total variable cost, calculate the profit or loss associated with producing that quantity. Assume that if the firm is indifferent between producing and shutting down, it will choose to produce. (Hint: Select purple points [diamond symbols] on the graph to receive exact average variable cost information.) Price (Dollars per tracker) Quantity (Trackers) Total Revenue (Dollars) Fixed Cost (Dollars) Variable Cost (Dollars) Profit (Dollars) 25.00 520,000 40.00 65.00 520,000 520,000 If the firm shuts down, it must incur its fixed costs (FC) in…arrow_forward
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