The diagram to the right shows the long-run equilibrium for a competitive market for three different levels of demand (Do, D₁, and D₂). Assume that firms earn a normal level of profits at each market equilibrium. Illustrate the long-run industry supply curve. Using the line drawing tool, draw the long-run industry supply curve. Label this curve "LRIS'. Note: Carefully follow the instructions above and only draw the required object.
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- Short-run supply and long-run equilibrium Consiber the competitive market for rhodium. Assume that no matter how many firms operate in the induatry, every firm is identical and faces the same marpinal cost (MC), averapt total cost (ATC), and average variable cost (AVC ) curves plotted in the following praph. The following graph plots the market demand curve for thodium. If there were 10 firms in this market, the short-run equilibrium price of rhodium would be per pound. At that price, firms in this industry would. Therefore, in the long run, firms would the rhodium market. 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 rhodium industry in long-run equilibrium. True or False: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns positive accounting profit. True FalseThe figure below shows the supply and the demand for a good (left) and the cost curves of an individual firm in this market (right). Assume that all firms in this market, including the potential entrants, have identical cost curves. Initially, the market is in equilibrium at point A. Price Cost MC ATC A 4 2 1 D 2 4 6 8 10 12 Quantity Quantity Refer to the figure above. Suppose that the market has reached the long-run equilibrium. Then, due to news of the product's defects and recall, the demand falls by 4 units at each price. At the new equilibrium, each firm in the market earns and there will be a. zero economic profit; neither entry nor exit of firms b. positive economic profit; entries of new firms C. zero accounting profit; both entry and exit of firms d. negative economic profit; exit of existing firmsSuppose that the market for chicken momos is perfectly competitive with ten firms producing momos. Tasty treat is one of the ten price-takers in the market for momos. The accompanying tables show the demand schedule for momos in Dhaka and cost schedule for "Tasty Treat". DEMAND SCHEDULE Price (BDT per plate) Quantity demanded (plate per hour) 10 900 25 675 30 600 40 450 50 300 70 0 COST SCHEDULE OF TASTY TREAT Output (plate per hour) Marginal Cost (BDT per extra plate) Average Variable Cost (BDT per plate) Average total cost (BDT per plate) 40 20 25 90 50 10 10 75 60 30 20 55 70 50 23 50 80 70 35 60 90 85 50 77 a) What is the value of the shut-down price and break-even price for Tasty Treat?How did you figure that out?b) Write down the individual supply schedule of chicken momos for Tasty Treat and the industry supply schedule for chicken momos.c) Plot the market demand and supply curves for chicken momos and find the equilibrium price and…
- Consider the market for solar power. Assume the market is perfectly competitive and initially in long-run equilibrium; solar power sells for $.25 per kwh (kilowatt hour, a unit of power). Draw2graphs, oneto represent the market (supply and demand), and one to represent asingle firm (demand, marginal cost, and average cost curves). Assume a u-shaped average cost Show the equilibrium price and the quantity produced by the market (Q) and by each individual firm (q).Ukraine is one of the biggest exporters of sunflower oil in the world. War between Ukraine and Russia hence significantly impacted the available stock of the sunflower oil in the world’s market. Either sunflower oil or olive oil is an input to manufacture biscuit. Consider that the market for olive oil is in perfect competition and initially at the equilibrium. Explain the impact of the war on the supply, demand, equilibrium on market of olive oil Give a graphical representationcan you draw a diagram of long run industry supply curve, with price on the y-axis and quantity on the x-axis, and a downward-sloping curve showing the relationship between price and quantity supplied? then also draw another diagram of long run industry supply curve, with price on the y-axis and quantity on the x-axis, and a downward-sloping curve showing the original relationship between price and quantity supplied, and a second, upward-sloping curve showing the new relationship between price and quantity supplied after the increase in the price of oil?
- Consider the competitive market for sports jackets. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves for a typical firm in the industry. 72 16 AVC 16 24 40 QUANTITY (Thousards of jaats) For each price in the following tabie, use the graph to determine the number of jackets this firm would produce in arder to maximize its profie. Assume that when the price is exacty equal to the average variabie cost, the firm is indifferent between producing zero jackets and the proft-maximizing quandity. Also, indicate whether the fiem wil produce, shut down, or be indiferent between the two in the short run. Lastiy, determine whether e w make a prafit, suffer a loss, ar break even at each price. Price Quantity (Dollars per jacket) (Jackets) Produce or Shut Down? Profit or Loss? 4 12 36 48 60The let graph shows the world market for wheat. The right graph shows the cost curves and the marginal revenue curve of an individual wheat farmer at the initial long-run equilibrium The world population increases. In the left graph, draw the new demand curve. Label it Draw the market supply curve that returns the wheat market to its long-run equilibrium. Label it Draw a point to show the new long-run equilibrium price and quantity In the right graph, draw a point to show the firm's price and quantity in the long run >>>Draw only the objects specified in the question 16 124 Price (dollars per bushel) 10 P₁ 05 10 15 20 25 30 35 40 Quantity (bons of bushels per year) C Price and cost (dollars per bushel) 20 MC 10 ATC 124 M 10 MAR 200 650 100 150 200 250 300 350 400 Quantity (thousands of bushels per year) 0 a 3Use the information in the graphs below to answer the following questions SAb $/gal 25- S1 25 H MC ATC 20 20 15 15 P1 10 10 P2 5 4 6 8 10 2. Thousands of gal/week 1 3 Millions of gal/week What is the long-run equilibrium price in this market? Please enter your answers as whole numbers with and do not type out your answer in words (ie. $5 or $5.00 not "Five dollars"). How many gallons per week will the individual firm produce to maximize profits in equilibrium? Please enter your answers as whole numbers with no extra words (ie. 5000 not "5000 gallons/week"). What is the individual firm's long run economic profit?
- 13. Suppose a representative firm in a perfectly competitive industry has the following totalcost of production in the short run: TC=Q^3-40Q^2+600Q.a. What will be the long run equilibrium quantity for the firm? What will be the longrun equilibrium price in this industry?b. Let the industry demand be given by QD=12400-4P. How many firms will be activein the long-run equilibrium?c. Suppose the firm faces a positive demand shock that increases the industry demandto QD=16000-4P. Describe how the industry would respond and calculate thechange in the number of firms.Suppose a firm in a competitive industry has the following cost curves: 10 4.5 3.5 9+ 8 7 6 3 ↑Price 2 1 2 3 4 5 MC ATC AVC + + 6 7 8 Quantity Refer to Figure 14-13. If the price is $6 in the short run, what will happen in the long run? a. Individual firms will earn negative economic profits in the short run, which will cause some firms to exit the industry. b. Nothing. The price is consistent with zero economic profits, so there is no incentive for firms to enter or exit the industry. C. Individual firms will earn positive economic profits in the short run, which will entice other firms to enter the industry. d. Because the price is below the firm's average variable costs, the firms will shut down.b). The Philadelphia water ice industry is a constant cost industry. The demand for water ice shifts outward each year when it gets hot. What are the steps by which the competitive water ice market insures an increased amount of water ice. Explain and graph at the industry and firm levels. What is the long-run price of water ice?