7. The long-run supply curve in different cost industriesThe following graph shows the market for tortilla chip. Initially, the market is in a long-run equilibrium.Suppose that a change in tastes resulted in a leftward shift in demand.On the following graph, shift the demand or supply curve to reflect this change in tastes. Then use the grey point (star symbol) to indicate the newshort-run equilibrium.Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps backto its original position, just drag it a little farther.PRICE (Dollars per bag)1000in24In the short run, firms willShort-run SupplyDemandQUANTITY (Thousands of bags)810DemandShort-run SupplyShort-run EquilibriumLong-run EquilibriumLong-run Supply?. In the long run, the supply curve willOn the previous graph, show the shift in the supply curve and then use the purple point (diamond symbol) to indicate the resulting new long-run equilibrium.Comparing the two long-run equilibria on the graph, you can see that the tortilla chip market is an example ofOn the previous graph, use the green line (diamond symbols) to plot the long-run market supply curve for tortilla chips.

The long-run supply curve represents the relationship between the quantity of a good or service that…

7. The long-run supply curve in different cost industries The following graph shows the market for tortilla chip. Initially, the market is in a long-run equilibrium. Suppose that a change in tastes resulted in a leftward shift in demand. On the following graph, shift the demand or supply curve to reflect this change in tastes. Then use the grey point (star symbol) to indicate the short-run equilibrium. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snap to its original position, just drag it a little farther. 10 Short-run Supply

7. The long-run supply curve in different cost industries The following graph shows the market for tortilla chip. Initially, the market is in a long-run equilibrium. Suppose that a change in tastes resulted in a leftward shift in demand. On the following graph, shift the demand or supply curve to reflect this change in tastes. Then use the grey point (star symbol) to indicate the short-run equilibrium. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snap to its original position, just drag it a little farther. 10 Short-run Supply

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter18: The Markets For The Factor Of Production

Section: Chapter Questions

Problem 3PA

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1 Hypothetical Case 1 The following equations describe the long-run situation for prices and costs, where the numbers indicate the amounts of labor and capital needed to produce a unit of wheat and cloth. W is the wage rate/hour and R is the rental rate/hour. Price of wheat = 1 W + 2 R Price of cloth = 2 W + 1 R In autarky, the price of wheat is 5 and the price of cloth is 4. As trade opens up wheat price rises from 5 to 6. Cloth price remains at 4. Consider Hypothetical Case 1 above. After trade opens up, how many units of wheat can a worker buy with one hour of labor?
Assume the natural gas industry is still living with the short-run supply disruption. Then, unusually warm weather causes demand for natural gas to decrease unexpectedly. Analyze the impact of this reduction in demand in for natural gas. graphically depict any changes affecting the market for natural gas and any changes that impact the individual firm. Show the movements of the curves (if any) and the new Short Run Equilibrium (SRE). assume the natural gas industry is perfectly competitive, demand is downward sloping, supply is upward sloping, and production technology results in traditional U-shaped ATC and AVC curves. market price is always greater than the minimum of the AVC curve.
19.What is meant by zero economic profit? If a firm earns zero economic profit in long run does it violate the profit maximizing behaviour of a firm in long run as if there is no profit then there is no point of production?
1) Explain in details whether the underlined part of statement is true or false. In short-run production with two inputs where land is a fixed input labor is a variable input, the relationship between marginal product of labor and marginal cost of production is positive.
7) Refer to Figure 13-15 to answer the following questions. What is the profit-maximizing output level? What is the profit-maximizing price? What is the average total cost at the profit-maximizing output level? What area represents the firm's profit? At which output level are economies of scale exhausted? Does this graph most likely represent the long run or the short run? Why?
(a) Suppose initially there is a long run equilibrium in a perfeetly competitive market. If suddenly there is a negative demand shock in the market, how the market will adjust to a new long-run equilibrium? Provide adequate graph to supplement your answer.
Place the orange line (square symbol) on the following graph to show the most likely long-run supply curve for pistachios. (Note: Place the points of the line either on Y and V or on Y and S.) PRICE (Dollars per pound) 48 40 32 16 8 O 0 4 S V Short-Run Supply 2 6 8 10 QUANTITY (Thousands of pounds of pistachios) 12 Long-Run Supply ? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
(1) Use the graph to answer the question. Between points C and D, the long-run average total cost curve is characterized by ________ because the firm is experiencing ________ returns to scale. A-constant returns; constant. B-economies of scale; increasing. C-economies of scale; constant D-diseconomies of scale; increasing. E-diseconomies of scale; decreasing The graph is attached on the following (2) If a firm is operating at a point on its long-run average total cost curve where the slope is negative, it is A-experiencing increasing returns to scale. B-experiencing constant returns to scale C-experiencing decreasing returns to scale. D-achieving efficient scale. E-making progressively less as it increases its inputs (3) If a firm is maximizing its profit and is earning positive economic profit, which of the following must be true? A-Average total cost < price; marginal cost = marginal revenue B-Average total cost > price; marginal cost = marginal revenue C-Average…
(10) The law of diminishing returns states that: (a) as a firm uses more of a variable resource, given the quantity of fixed resources, the average product of the firm will increase. (b) as a firm uses more of a variable resource, given the quantity of fixed resources, marginal product of the firm will eventually decrease. (c) in the short run, the average total costs of the firm will eventually diminish. (d) in the long run, the average total costs of the firm will eventually diminish.
In the short run, firms will 1. (earn economic profits, suffer economic losses). In the long run, the supply curve will 2. (shift rightward, shift leftward, remain unchanged) Comparing the two long-run equilibria on the graph, you can see that the milk market is an example of 3. (a decreasing-cost industry, an increasing-cost industry, a low-cost industry, a high-cost industry)
. 1. What area represents the firm's profit? 2.At which output level are economies of scale exhausted? 3.Does this graph most likely represent the long run or the short run? Why?
A6 “Commodity-rich Australia is one of the very few countries to receive an economic growth upgrade by the International Monetary Fund, after the global outlook was slashed due to war in Ukraine and soaring inflation.” (Financial Review, 11 April 2022). “Australia’s economy has received a boost from the surge in the price of commodities such as gas, iron ore, coal and wheat”, said IMF division chief for Australia, Harald Finger. a. Assume that Australia’s economy is in its medium-run equilibrium (i.e. Y_t = Y_n and u_t = u_n) where Y_t represents the level of output in year t; u_t is the unemployment rate in year t; u_n is the natural rate of unemployment. Use the multiplier model diagram to illustrate the impact on Australia’s GDP from an increase in net export due to increase in commodity prices. Show the output gap in your graph.