The following graph shows the market demand for copper. 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 firms. 100 90 Supply (20 firms) 80 70 60 Supply (30 firms) 40 Supply (40 firms) Demand 30 20 10 250 QUANTITY (Thousands of pounds) 125 a75 500 625 750 B75 1000 1125 1250 If there were 30 firms in this market, the short-run equilibrium price of copper would be s . . Therefore, in the long run, firms would per pound. At that price, firms in this industry would the copper 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 copper industry in long-run equilibrium. PRICE (Dollars per pound)
The following graph shows the market demand for copper. 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 firms. 100 90 Supply (20 firms) 80 70 60 Supply (30 firms) 40 Supply (40 firms) Demand 30 20 10 250 QUANTITY (Thousands of pounds) 125 a75 500 625 750 B75 1000 1125 1250 If there were 30 firms in this market, the short-run equilibrium price of copper would be s . . Therefore, in the long run, firms would per pound. At that price, firms in this industry would the copper 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 copper industry in long-run equilibrium. PRICE (Dollars per pound)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:The following graph shows the market demand for copper.
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 firms.
100
90
Supply (20 firms)
80
70
60
Supply (30 firms)
40
Supply (40 firms)
Demand
30
20
10
250
QUANTITY (Thousands of pounds)
125
a75
500 625 750 B75 1000 1125 1250
If there were 30 firms in this market, the short-run equilibrium price of copper would be s
. . Therefore, in the long run, firms would
per pound. At that price, firms in this industry would
the copper 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 copper industry in long-run
equilibrium.
PRICE (Dollars per pound)
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