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The following diagram shows the market demand for steel. Use the orange points (square symbol) to plot the Initial short-run Industry supply curve when there are 20 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 30 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 40 firns. 100 90 Supply (20 firms) 80 70 60 Suply (30 frms) 50 40 Seply (40 frma) Demand 30 20 20 125 250 375 500 625 750 875 1000 1125 1250 QUANTITY (Thausands of tans) If there were 30 firms in this market, the short-run equilibrum price of steel would be s . Therefore, In the long run, firms would | per ton. At that price, firms in this industry would the steel market. Because you know that perfectly competitive firms earn v 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. (us nd spa) aoad

The following diagram shows the market demand for steel. Use the orange points (square symbol) to plot the Initial short-run Industry supply curve when there are 20 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 30 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 40 firns. 100 90 Supply (20 firms) 80 70 60 Suply (30 frms) 50 40 Seply (40 frma) Demand 30 20 20 125 250 375 500 625 750 875 1000 1125 1250 QUANTITY (Thausands of tans) If there were 30 firms in this market, the short-run equilibrum price of steel would be s . Therefore, In the long run, firms would | per ton. At that price, firms in this industry would the steel market. Because you know that perfectly competitive firms earn v 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. (us nd spa) aoad

Principles of Microeconomics
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter18: The Markets For The Factor Of Production
Section: Chapter Questions
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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 (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. 100 90 90 70 60 50 40 ATC 30 20 AVC 10 MC O 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of tons) COSTS (Dollars per ton)
Transcribed Image Text: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 (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. 100 90 90 70 60 50 40 ATC 30 20 AVC 10 MC O 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of tons) COSTS (Dollars per ton)
The following diagram shows the market demand for steel. Use the orange polnts (square symbol) to plot the Initial short-run Industry supply curve when there are 20 firms In the market. (Hint: You can disregard the portion of the supply curve that coresponds to prices where there is no output, since this is the Industry supply curve.) Next, use the purple polnts (diamond symbol) to plot the short-run Industry supply curve when there are 30 firms. Finally, use the green points (triangle symbol) to plot the short-run Industry supply curve when there are 40 firms. (?) 100 s0 Supply (20 firms) 80 70 60 Supply (30 firms) A 50 A 40 Supply (40 frms) Demand 30 20 10 125 250 375 500 625 750 875 1000 1125 1250 QUANTITY (Thausands of tans) If there were short-run equilibrium price of steel would be $ per ton. At that price, firms In this Industry would v. Therefore, In the long run, firms would v the steel market. v economic profit In the long run, you know the long-run equilibrlum price must v firms operating in the steel Industry In long-run Because you know that perfectly competitive firms earn be s per ton. From the graph, you can see that this means there will be equilibrium. PRICE (Dallars par ton)
Transcribed Image Text:The following diagram shows the market demand for steel. Use the orange polnts (square symbol) to plot the Initial short-run Industry supply curve when there are 20 firms In the market. (Hint: You can disregard the portion of the supply curve that coresponds to prices where there is no output, since this is the Industry supply curve.) Next, use the purple polnts (diamond symbol) to plot the short-run Industry supply curve when there are 30 firms. Finally, use the green points (triangle symbol) to plot the short-run Industry supply curve when there are 40 firms. (?) 100 s0 Supply (20 firms) 80 70 60 Supply (30 firms) A 50 A 40 Supply (40 frms) Demand 30 20 10 125 250 375 500 625 750 875 1000 1125 1250 QUANTITY (Thausands of tans) If there were short-run equilibrium price of steel would be $ per ton. At that price, firms In this Industry would v. Therefore, In the long run, firms would v the steel market. v economic profit In the long run, you know the long-run equilibrlum price must v firms operating in the steel Industry In long-run Because you know that perfectly competitive firms earn be s per ton. From the graph, you can see that this means there will be equilibrium. PRICE (Dallars par ton)
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