Question 32 What happens in an increasing cost industry in response to an increase in demand? firms exit and push costs downward until the new long run average cost curve's minimum point corresponds to the new, higher price. firms enter and push costs downward until the new long run average cost curve's minimum point corresponds to the new, lower price. firms starts to exit and output decreases until the price arrives at the new, higher price. firms enter and output increases until the price returns to its original level. firms enter and push costs upward until the new long run average cost curve's minimum point corresponds to the new, higher price.

Question 32 What happens in an increasing cost industry in response to an increase in demand? firms exit and push costs downward until the new long run average cost curve's minimum point corresponds to the new, higher price. firms enter and push costs downward until the new long run average cost curve's minimum point corresponds to the new, lower price. firms starts to exit and output decreases until the price arrives at the new, higher price. firms enter and output increases until the price returns to its original level. firms enter and push costs upward until the new long run average cost curve's minimum point corresponds to the new, higher price.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Firms In Competitive Markets

Section: Chapter Questions

Problem 11PA: Suppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + q2...

See similar textbooks

Similar questions

A computer company produces affordable, easy-to-use home computer systems and has fixed costs of 250. The marginal cost of producing computers is 700 for the first computer, 250 for the second, 300 for the third, 350 for the fourth, 430 for the fifth, 450 for the sixth, and 500 for the seventh. Create a table that shows the companys output, total cost, marginal cost, average cost, variable cost, and average variable cost. At what price is the zero-profit point? At what price is the shutdown point? If the company sells the computers for 500, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss. If the firm sells the computers for 300, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss.
Why will firms in most markets be located at or close to the bottom of the long-run avenge cost me?
How does the average variable cost curve help a firm know whether it should shut down immediately?
Would independent trucking fit the characteristics of a perfectly competitive industry?
Do entry and exit occur in the short run, the long run, both, or neither?
Suppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + q2 Marginal cost: MC = q where q is an individual firms quantity produced. The market demand curve for this product is Demand:QD = 120 P where P is the price and Q is the total quantity of the good. Currently, there are 9 firms in the market. a. What is each firms fixed cost? What is its variable cost? Give the equation for average total cost. b. Graph average-total-cost curve and the marginal-cost curve for q from 5 to 15. At what quantity is average-total-cost curve at its minimum? What is marginal cost and average total cost at that quantity? c Give the equation for each firms supply curve. d. Give the equation for the market supply curve for the short run in which the number of firms is fixed. e. What is the equilibrium price and quantity for this market in the short run? f. In this equilibrium, how much does each firm produce? Calculate each firms profit or loss. Is there incentive for firms to enter or exit? g. In the long run with free entry and exit, what is the equilibrium price and quantity in this market? h. In this long-run equilibrium, how much does each firm produce? How many firms are in the market?