Price The supply curves for the only two firms in a competitive industry are given by: S₁: P=2Q1 S2: P = 2 + Q2, where Q₁ is the output of firm 1 and Q2 is the output of firm 2. These two supply curves are shown in the graph below. Draw the market supply curve for this industry. Instructions: Use the tool provided to plot 4 price-quantity combinations for prices $0, $2, $4 and $6. Market Supply Tools 7 S₁ S2 60 line tool 5 4 3 2 1 1 0 1 2 3 4 5 6 7 8 Quantity i

Price The supply curves for the only two firms in a competitive industry are given by: S₁: P=2Q1 S2: P = 2 + Q2, where Q₁ is the output of firm 1 and Q2 is the output of firm 2. These two supply curves are shown in the graph below. Draw the market supply curve for this industry. Instructions: Use the tool provided to plot 4 price-quantity combinations for prices $0, $2, $4 and $6. Market Supply Tools 7 S₁ S2 60 line tool 5 4 3 2 1 1 0 1 2 3 4 5 6 7 8 Quantity i

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Economics Question
The graph contains individual supply curves for the only two firms in a hypothetical market for stuffed animals. Place the market supply curve at the correct location on the graph. Then, consider what would happen to the market if a third supplier enters the market, holding all else constant. Price per Stuffed Animal (5) 10 9 8 A 6 0 5 m 0 Market for Stuffed Animals Firm I Firm 2 Market 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Quantity of Stuffed Animals A third firm would mean O Firm 1 and Firm 2 would lower output to accommodate the new supplier in order to keep market supply constant. O market supply increases. O higher prices of stuffed animals. O market supply decreases.
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