Consider the perfectly competitive market for steel. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MCMC), average total cost (ATCATC), and average variable cost (AVCAVC) curves shown on the following graph. The following diagram shows the market demand for steel.Use the orange points (square symbol) to plot the short-run industry supply curve when there are 10 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 15 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 20 firms. If there were 20 firms in this market, the short-run equilibrium price of steel would be per ton. At that price, firms in this industry would. Therefore, in the long run, firms would the steel market. Because you know that perfectly competitive firms earn economic profit in the long run, you know the long-run equilibrium price must be per ton. From the graph, you can see that this means there will be firms operating in the steel industry in long-run equilibrium. True or False: Each of the firms operating in this industry in the long run earns negative accounting profit. TrueFalse Consider the perfectly competitive market for steel. Assume that, regardless of how many firms are in the industry, every firm in the industry isidentical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph.100908070COSTS (Dollars per ton)883020100+0MCATCAVCDDD10 20 30 40 50 60 70 80 90QUANTITY OF OUTPUT (Thousands of tons)100 Use the orange points (square symbol) to plot the short-run industry supply curve when there are 10 firms in the market. (Hint: You can disregardthe portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points(diamond symbol) to plot the short-run industry supply curve when there are 15 firms. Finally, use the green points (triangle symbol) to plot theshort-run industry supply curve when there are 20 firms.PRICE (Dollars per lon)10090807060504030201000Demand+123 250 373 500 623 750 873 1000 1123 1250QUANTITY OF OUTPUT (Thousands of tons)Because you know that perfectly competitive firms earnbe 50Supply (10 firms)O TrueO FalseaSupply (15 firms)If there were 20 firms in this market, the short-run equilibrium price of steel would be. Therefore, in the long run, firms would4Supply (20 firms)per ton. From the graph, you can see that this means there will beper ton. At that price, firms in this industry wouldthe steel market.economic profit in the long run, you know the long-run equilibrium price mustfirms operating in the steel industry in long-run equilibrium.True or False: Each of the firms operating in this industry in the long run earns negative accounting profit.

Question

Consider the perfectly competitive market for steel. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MCMC), average total cost (ATCATC), and average variable cost (AVCAVC) curves shown on the following graph. The following diagram shows the market demand for steel.Use the orange points (square symbol) to plot the short-run industry supply curve when there are 10 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 15 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 20 firms. If there were 20 firms in this market, the short-run equilibrium price of steel would be per ton. At that price, firms in this industry would. Therefore, in the long run, firms would the steel market. Because you know that perfectly competitive firms earn    economic profit in the long run, you know the long-run equilibrium price must be per ton. From the graph, you can see that this means there will be    firms operating in the steel industry in long-run equilibrium. True or False: Each of the firms operating in this industry in the long run earns negative accounting profit. TrueFalse Consider the perfectly competitive market for steel. Assume that, regardless of how many firms are in the industry, every firm in the industry isidentical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph.100908070COSTS (Dollars per ton)883020100+0MCATCAVCDDD10 20 30 40 50 60 70 80 90QUANTITY OF OUTPUT (Thousands of tons)100 Use the orange points (square symbol) to plot the short-run industry supply curve when there are 10 firms in the market. (Hint: You can disregardthe portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points(diamond symbol) to plot the short-run industry supply curve when there are 15 firms. Finally, use the green points (triangle symbol) to plot theshort-run industry supply curve when there are 20 firms.PRICE (Dollars per lon)10090807060504030201000Demand+123 250 373 500 623 750 873 1000 1123 1250QUANTITY OF OUTPUT (Thousands of tons)Because you know that perfectly competitive firms earnbe 50Supply (10 firms)O TrueO Falsea>Supply (15 firms)If there were 20 firms in this market, the short-run equilibrium price of steel would be. Therefore, in the long run, firms would4Supply (20 firms)per ton. From the graph, you can see that this means there will beper ton. At that price, firms in this industry wouldthe steel market.economic profit in the long run, you know the long-run equilibrium price mustfirms operating in the steel industry in long-run equilibrium.True or False: Each of the firms operating in this industry in the long run earns negative accounting profit.

Accepted Answer

The total amount of a particular commodity or service that all producers are willing and able to…