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Using graph, explain when the firm in a competitive market is in equilibrium?
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- Be sure to label the graphs. Suppose in the competitive market for a good known as “Tovars” that there are 5,000 firms. Assuming each firm is at a point where P=ATC. Suddenly, a huge number of entrepreneurs enters the market so the number of firms increases by 1,000. a. Please draw a graph showing the short run effect. Please label the price and quantities initially as P1, q1, Q1 and the short run price and quantities as P2, q2, Q2 b. On the graph in a, please show the long run effect. Please label the long run price and quantities as P3, q3, Q3. Relative to the initial equilibrium (before the entrance of 1,000 firms), What happens to the P? What happens to the q? What happens to the Q?Suppose the market for bottled water and the market for soft drinks both have large numbers of buyers and sellers. Which of these markets is likely tobe more competitive?Suppose that the tuna industry is in long-run equilibrium at a price of $5 per can of tuna and a quantity of 200 million cans per year. Suppose the Public Health Agency of Canada (PHAC) issues a report saying that eating tuna is bad for your health. 1st GRAPH: The PHAC's report will cause consumers to demand ____ (less OR more) tuna at every price. In the short run, firms will respond by ______ (exiting the industry OR producing the same amount of tuna and running at a loss OR producing less tuna and running at a loss OR producing more tuna and earning positive profit OR entering the industry OR producing the same amount of tuna and earning positive profits) In the long run, some firms will respond by ______ (producing more tuna and earning positive profit OR producing less tuna and running at a loss OR exiting the industry OR producing less tuna and earning positive profit OR entering the industry OR producing more tuna and running at a loss) until _______ (tuna population…
- Briefly explain the reason for why in a competitive market we expect economic profits to be zero inthe long run. Why do firms operate even though they face 0 economic profit?You read in a business magazine that farmers are reaping high profits. With the theory of perfect competition in mind, what do you expect to happen over time (in the long run) to each of the following? a. The prices of agricultural products how will this affect the market equilibrium price of the agricultural products? Will it remain the same, increase or decrease?Briefly explain four assumptions of perfectly competitive market
- Hi there. can you please assist on the following question 1. Describe any four requirements for a perfectly competitive goods market.The consumers’ surplus when the market is perfectly competitive and when itsmonoplized. Show in graph and explain.The following graph shows a firm’s marginal cost and average cost of production of raspberries. a. The equilibrium price at this market is $2.5. At this price, is the firm earning economic profit or is itincurring economic losses?b. Is the firm operating in a competitive market based on the given information? Why?c. Suppose the price of raspberries increases to $5. How would you answer a. and b. in this case?d. If the market is indeed competitive, what will happen after the price increase in c.? What will bethe final price and the long-term profit of the firm?
