The accompanying graphs represent the soy bean market, a competitive market and Roy's Soys, an individual firm in themarket for soy beans. The soy bean market graph depicts the short-run supply (SRS), long-run supply (LRS), and demand(D). The graph for Roy's Soys represents marginal consts (MC) and average costgs (AC). The market and the firm arecurrently in long-run equilibrium at point A.a. Demonstrate what happens in the short run on both graphs when a new medical study shows soy beans to be an effectiveweight-loss supplement. On the market graph, you will shift a curve (or curves). On the firm's graph, use "Price 2" to drawa new price line for the firm. On both graphs, indicate the new equilibrium points with the points labeled B.b. Now, demonstrate the changes that get both graphs back to long run equilibrium. Use shift(s) for the market and "Price3" for the firm. Indicate the new long-run equilibrium with the green points labeled C. Soy Bean MarketRoy's SoysPrice 32020Price 219SRS19MCC.18181717AC1616151514141313121211111010LRSPrice440 1 2 34 5 67 8 9 10 11 12 13 14 15 16 17 18 19 20Quantity (millions of bushels)0 1 2 3 4 5 67 8 9 10 11 12 13 14 15 16 17 18 19 20Quantity (millions of bushels)Price (S)Price (S)

Question
Asked Dec 12, 2019
142 views
The accompanying graphs represent the soy bean market, a competitive market and Roy's Soys, an individual firm in the
market for soy beans. The soy bean market graph depicts the short-run supply (SRS), long-run supply (LRS), and demand
(D). The graph for Roy's Soys represents marginal consts (MC) and average costgs (AC). The market and the firm are
currently in long-run equilibrium at point A.
a. Demonstrate what happens in the short run on both graphs when a new medical study shows soy beans to be an effective
weight-loss supplement. On the market graph, you will shift a curve (or curves). On the firm's graph, use "Price 2" to draw
a new price line for the firm. On both graphs, indicate the new equilibrium points with the points labeled B.
b. Now, demonstrate the changes that get both graphs back to long run equilibrium. Use shift(s) for the market and "Price
3" for the firm. Indicate the new long-run equilibrium with the green points labeled C.
help_outline

Image Transcriptionclose

The accompanying graphs represent the soy bean market, a competitive market and Roy's Soys, an individual firm in the market for soy beans. The soy bean market graph depicts the short-run supply (SRS), long-run supply (LRS), and demand (D). The graph for Roy's Soys represents marginal consts (MC) and average costgs (AC). The market and the firm are currently in long-run equilibrium at point A. a. Demonstrate what happens in the short run on both graphs when a new medical study shows soy beans to be an effective weight-loss supplement. On the market graph, you will shift a curve (or curves). On the firm's graph, use "Price 2" to draw a new price line for the firm. On both graphs, indicate the new equilibrium points with the points labeled B. b. Now, demonstrate the changes that get both graphs back to long run equilibrium. Use shift(s) for the market and "Price 3" for the firm. Indicate the new long-run equilibrium with the green points labeled C.

fullscreen
Soy Bean Market
Roy's Soys
Price 3
20
20
Price 2
19
SRS
19
MC
C.
18
18
17
17
AC
16
16
15
15
14
14
13
13
12
12
11
11
10
10
LRS
Price
4
4
0 1 2 3
4 5 67 8 9 10 11 12 13 14 15 16 17 18 19 20
Quantity (millions of bushels)
0 1 2 3 4 5 67 8 9 10 11 12 13 14 15 16 17 18 19 20
Quantity (millions of bushels)
Price (S)
Price (S)
help_outline

Image Transcriptionclose

Soy Bean Market Roy's Soys Price 3 20 20 Price 2 19 SRS 19 MC C. 18 18 17 17 AC 16 16 15 15 14 14 13 13 12 12 11 11 10 10 LRS Price 4 4 0 1 2 3 4 5 67 8 9 10 11 12 13 14 15 16 17 18 19 20 Quantity (millions of bushels) 0 1 2 3 4 5 67 8 9 10 11 12 13 14 15 16 17 18 19 20 Quantity (millions of bushels) Price (S) Price (S)

fullscreen
check_circle

Expert Answer

Step 1

The increase in demand for Soybeans shifts the demand curve to rightward (D2). It intersects the supply curve at B with the higher market price 2. The firm accept this price and equalize the price with marginal cost curve at point B.

Step 2

In the long run, the higher price encourages the producers to produce more goods in the market. Thus, it shift...

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Economics

Related Economics Q&A

Find answers to questions asked by student like you
Show more Q&A
add
question_answer

Q: Pretend that a country is on the gold standard and an evil villain succeeds in destroying a signific...

A: 1. Under gold standard the value of country's paper money or currency is directly linked to the valu...

question_answer

Q: What proportions of your money balance are held for transactions, precautionary, and speculative pur...

A: A poor person will hold a large proportion of income for transactions purposes and a lower proportio...

question_answer

Q: "An annuity provides for 15 consecutive end-of-year payments of $73,000 in actual dollars. The gener...

A: Since the annuity is provided for 15 years and end of payments is $73000 in actual dollars, with gen...

question_answer

Q: "You invest $75 immediately for 9 years. The inflation rate is 5.1%. At the end of 9 years, you rece...

A: Market rate:

question_answer

Q: 18

A: Hello, since you have posted multiple questions and not specified which question needs to be solved,...

question_answer

Q: Given the nature of the implementation lag discussed in the text, discuss possible measures that mig...

A: The time gap between the occurrence of a negative economic event and the implementation of the fisca...

question_answer

Q: Suppose in our model, lifespans increased due to a productivity in- crease. What would likely happen...

A: a.The change in the technology when leads to an increase in the lifespan as well as the amount of ye...

question_answer

Q: The information in the table pertains to an imaginary economy.   Type of Money Amount Larg...

A: M2 is a component of money supply that included everything in M1 plus some other type of deposits al...

question_answer

Q: Suppose the public holds $25B as cash in wallets and purses and $50B in demand deposits. If the Fed ...

A: The share of money held with the public is given to be $25B and that in demand deposits is $50B. The...