Price of BoMC1MC₂Quantity of BooksNow suppose the patent expires and other firms are free to use the technology.Which of the following statements are true about what happens in the long run? Check all that apply.All firms' average-total-cost curves decline to ATC2.All firms make positive profits.O The market price falls to P2. Suppose the book-printing industry is competitive and begins in a long-run equilibrium. Then Hi-Tech Printing Company invents a new process thatsharply reduces the cost of printing books.The following graph shows Hi-Tech's initial marginal-cost curve (MC1) and average-total-cost curve (ATC1 ) before the new technology, and itsmarginal-cost curve (MC2) and average-total-cost curve (ATC2) after the new technology.Price of BooksATC1*MC₁MC 2Quantity of BooksATC2?

All firms earn zero profit When all firms adopt new technology their average total cost becomes ATC2…

Price of Bo MC₁ MC₂ Quantity of Books Now suppose the patent expires and other firms are free to use the technology. Which of the following statements are true about what happens in the long run? Check all that apply. All firms' average-total-cost curves decline to ATC₂. All firms make positive profits. The market price falls to P2.

Price of Bo MC₁ MC₂ Quantity of Books Now suppose the patent expires and other firms are free to use the technology. Which of the following statements are true about what happens in the long run? Check all that apply. All firms' average-total-cost curves decline to ATC₂. All firms make positive profits. The market price falls to P2.

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter8: Perefect Competition

Section: Chapter Questions

Problem 19SQ

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Suppose the book-printing industry is competitive and begins in a long-run equilibrium. Then Hi-Tech Printing Company invents a new process that sharply reduces the cost of printing books. The following graph shows Hi-Tech's initial marginal-cost curve (MC1MC1) and average-total-cost curve (ATC1ATC1) before the new technology, and its marginal-cost curve (MC2MC2) and average-total-cost curve (ATC2ATC2) after the new technology. Now suppose the patent expires and other firms are free to use the technology. Which of the following statements are true about what happens in the long run? Check all that apply. The market price stays at P1P1. Hi-Tech's average-total-cost curve rise back to ATC1ATC1. All firms earn zero profit.
Suppose Dmitri runs a small business that manufactures frying pans. Assume that the market for frying pans is a competitive market, and the market price is $20 per frying pan. The following graph shows Dmitri's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for frying pans quantities zero through seven (inclusive) that Dmitri produces. Dmitri's profit is maximized when he produces frying pans. When he does this, the marginal cost of the last frying pan he produces is , which is than the price Dmitri receives for each frying pan he sells. The marginal cost of producing an additional frying pan (that is, one more frying pan than would maximize his profit) is , which is than the price Dmitri receives for each frying pan he sells. Therefore, Dmitri's profit-maximizing quantity corresponds to the intersection of the curves. Because Dmitri is a price taker, this last condition…
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