Consider the competitive market for products known as Bergers where there are 500 firms – with each firm in equilibrium. a.Draw the graph of the market and the graph of one of these initial 500 firms in its equilibrium that includes the curves for P, MC and ATC. b. Suddenly, a huge number of entrepreneurs enters the market so the number of firms increases by 500. Please draw what happens to the market and to the firm in the short run on the graphs above. Does the P increase or decrease? Does q increase or decrease? Does Q increase or decrease?
Consider the competitive market for products known as Bergers where there are 500 firms – with each firm in equilibrium. a.Draw the graph of the market and the graph of one of these initial 500 firms in its equilibrium that includes the curves for P, MC and ATC. b. Suddenly, a huge number of entrepreneurs enters the market so the number of firms increases by 500. Please draw what happens to the market and to the firm in the short run on the graphs above. Does the P increase or decrease? Does q increase or decrease? Does Q increase or decrease?
Chapter9: Perfect Competition
Section: Chapter Questions
Problem 13QP
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Consider the competitive market for products known as Bergers where there are 500 firms – with
each firm in equilibrium.
a.Draw the graph of the market and the graph of one of these initial 500 firms in its equilibrium
that includes the curves for P, MC and ATC.
b. Suddenly, a huge number of entrepreneurs enters the market so the number of firms increases
by 500. Please draw what happens to the market and to the firm in the short run on the graphs
above.
Does the P increase or decrease?
Does q increase or decrease?
Does Q increase or decrease?
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