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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. PRICE (Dollars per pound) 100 90 $ 80 70 60 50 40 30 20 10 0 Demand 0 125 250 375 500 625 750 875 1000 1125 1250 QUANTITY (Thousands of pounds) Supply (10 firms) Supply (15 firms) A Supply (20 firms) (?) If there were 10 firms in this market, the short-run equilibrium price of titanium would be s would ▼. Therefore, in the long run, firms would per pound. At that price, firms in this industry the titanium 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 titanium industry in long-run equilibrium.

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. PRICE (Dollars per pound) 100 90 $ 80 70 60 50 40 30 20 10 0 Demand 0 125 250 375 500 625 750 875 1000 1125 1250 QUANTITY (Thousands of pounds) Supply (10 firms) Supply (15 firms) A Supply (20 firms) (?) If there were 10 firms in this market, the short-run equilibrium price of titanium would be s would ▼. Therefore, in the long run, firms would per pound. At that price, firms in this industry the titanium 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 titanium industry in long-run equilibrium.

Economics (MindTap Course List)
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter21: Production And Costs
Section: Chapter Questions
Problem 16QP
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 Short-run supply and long-run equilibrium

Consider the competitive market for titanium. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph.

 

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Use the orange points (square symbol) to plot the initial 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. PRICE (Dollars per pound) 100 90 $ 80 70 60 50 40 30 20 10 0 0 125 Demand Because you know that competitive firms earn H 250 375 500 625 750 875 1000 1125 1250 QUANTITY (Thousands of pounds) True False 0 Supply (10 firms) Supply (15 firms) If there were 10 firms in this market, the short-run equilibrium price of titanium would be $ would . Therefore, in the long run, firms would A Supply (20 firms) per pound. From the graph, you can see that this means there will be (? per pound. At that price, firms in this industry the titanium market. ▾ economic profit in the long run, you know the long-run equilibrium price must be firms operating in the titanium 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 negative accounting profit.
Transcribed Image Text:Use the orange points (square symbol) to plot the initial 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. PRICE (Dollars per pound) 100 90 $ 80 70 60 50 40 30 20 10 0 0 125 Demand Because you know that competitive firms earn H 250 375 500 625 750 875 1000 1125 1250 QUANTITY (Thousands of pounds) True False 0 Supply (10 firms) Supply (15 firms) If there were 10 firms in this market, the short-run equilibrium price of titanium would be $ would . Therefore, in the long run, firms would A Supply (20 firms) per pound. From the graph, you can see that this means there will be (? per pound. At that price, firms in this industry the titanium market. ▾ economic profit in the long run, you know the long-run equilibrium price must be firms operating in the titanium 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 negative accounting profit.
Consider the competitive market for titanium. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. 100 80 70 60 V 50 40 ATC 30 AVC MC COSTS (Dollars per pound) 90 20 10 0 0 10 + + 30 40 50 60 70 QUANTITY (Thousands of pounds) + 80 20 90 100 ?
Transcribed Image Text:Consider the competitive market for titanium. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. 100 80 70 60 V 50 40 ATC 30 AVC MC COSTS (Dollars per pound) 90 20 10 0 0 10 + + 30 40 50 60 70 QUANTITY (Thousands of pounds) + 80 20 90 100 ?
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