Microeconomics (7th Edition)
7th Edition
ISBN: 9780134737508
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Question
Chapter 12, Problem 12.5.11PA
Subpart (a):
To determine
Market for Cocoa and the market for representative farmer.
Subpart (b):
To determine
Market for Cocoa and the market for representative farmer.
Subpart (c):
To determine
Market for Cocoa and the market for representative farmer.
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Suppose that the perfectly competitive market for wheat spaghetti is in long-run equilibrium. Suppose also that campaigns for fighting obesity make students on lots of college campuses in the US aware of the fact that excessive pasta (including spaghetti) consumption has an adverse effect on body weight, and these campaigns provide an incentive for students to restrict spaghetti consumption.
How do the campaigns described above affect the market for wheat spaghetti in the US, that is does the supply or the demand curve for wheat spaghetti shift and in what direction? How are the equilibrium price and quantity of wheat spaghetti affected in the short run?
What happens to the short-run profit of the typical producer of wheat spaghetti in the US?
What will be the price of wheat spaghetti in the long run? What profit will producers of wheat spaghetti make in the long run? Explain how this outcome is achieved. Use two graphs: one showing the market supply and demand curves for wheat…
Now suppose that an FDA report announces that coffee is harmful to cardiovascular health. Starting from the diagrams show and discuss with your group how the market will adjust towards a short-run equilibrium and then return to a long-run equilibrium. What happen to the market price and quantity in the short-run? What happens to individual firm output and the number of firms in the short-run? What is the profit in the short-run? What happen to the market price and quantity in the long-run? What happens to individual firm output and the number of firms in the long-run? What is the profit in the long-run?
(in reference to: https://www.bartleby.com/questions-and-answers/market-for-coffee-shop-coffee-sarbucks-store-market-for-coffee-shop-coffee-sarbucks-store/0b934604-546c-4b2a-ae02-e65f6f9c2eb2 and https://www.bartleby.com/questions-and-answers/o-baby-fifty-quit-or-x-dessie-summ-g-love-island-season-m-gmail-email-from-h-m-inbox-96-o_folor-x-o-/fb1f7acb-7bb6-46ad-85e6-72aa635db643
Use a graph to demonstrate the circumstances that would prevail in a competitive market where firms are earning economic profits. Can this scenario be maintained in the long run? Carefully explain your answer.
2. Use a graph to demonstrate the circumstances that would prevail in a perfectly competitive market where firms are experiencing economic losses. Using your graph, determine whether this firm will shut down in the short run, or choose to remain in the market.
Chapter 12 Solutions
Microeconomics (7th Edition)
Ch. 12 - Prob. 12.1.1RQCh. 12 - Prob. 12.1.2RQCh. 12 - Prob. 12.1.3RQCh. 12 - Prob. 12.1.4PACh. 12 - Prob. 12.1.5PACh. 12 - Prob. 12.1.6PACh. 12 - Prob. 12.1.7PACh. 12 - Prob. 12.1.8PACh. 12 - Prob. 12.1.9PACh. 12 - Prob. 12.2.1RQ
Ch. 12 - Prob. 12.2.2RQCh. 12 - Prob. 12.2.3RQCh. 12 - Prob. 12.2.4PACh. 12 - Prob. 12.2.5PACh. 12 - Prob. 12.2.6PACh. 12 - Prob. 12.2.7PACh. 12 - Prob. 12.2.8PACh. 12 - Prob. 12.3.1RQCh. 12 - Prob. 12.3.2RQCh. 12 - Prob. 12.3.3PACh. 12 - Prob. 12.3.4PACh. 12 - Prob. 12.3.5PACh. 12 - Prob. 12.3.6PACh. 12 - Prob. 12.3.7PACh. 12 - Prob. 12.3.8PACh. 12 - Prob. 12.4.1RQCh. 12 - Prob. 12.4.2RQCh. 12 - Prob. 12.4.3RQCh. 12 - Prob. 12.4.4PACh. 12 - Prob. 12.4.5PACh. 12 - Prob. 12.4.6PACh. 12 - Prob. 12.4.7PACh. 12 - Prob. 12.4.8PACh. 12 - Prob. 12.4.9PACh. 12 - Prob. 12.4.10PACh. 12 - Prob. 12.5.1RQCh. 12 - Prob. 12.5.2RQCh. 12 - Prob. 12.5.3RQCh. 12 - Prob. 12.5.4PACh. 12 - Prob. 12.5.5PACh. 12 - Prob. 12.5.6PACh. 12 - Prob. 12.5.8PACh. 12 - Prob. 12.5.9PACh. 12 - Prob. 12.5.10PACh. 12 - Prob. 12.5.11PACh. 12 - Prob. 12.5.12PACh. 12 - Prob. 12.6.1RQCh. 12 - Prob. 12.6.2RQCh. 12 - Prob. 12.6.3RQCh. 12 - Prob. 12.6.4PACh. 12 - Prob. 12.6.5PACh. 12 - Prob. 12.6.6PACh. 12 - Prob. 12.6.7PACh. 12 - Prob. 12.6.8PACh. 12 - Prob. 12.6.9PACh. 12 - Prob. 12.6.10PACh. 12 - Prob. 12.1CTECh. 12 - Prob. 12.2CTECh. 12 - Prob. 12.3CTE
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Similar questions
- Will a perfectly competitive market display productive efficiency? Why or why not?arrow_forwardyou've been learning about what makes a market perfectly competitive, how a firm in a perfectly competitive market makes profit-maximizing decisions, and how a perfectly competitive market moves towards equilibirium. But how applicable is this to real life? For this discussion, try to think of a market (for a product or service) that is perfectly competitive or very close to it. What characteristics of the market make it like perfect competition? Are there factors that keep it from being perfectly competitive? If so, what are they? How close do you think the firms in this market are to perfectly competitive firms in choosing equilibrium price and quantity?arrow_forwardQ. Suppose the book-printing industry is competitive and begins in long-run equilibrium. a. Draw a diagram describing the typical firm in the industry. b. Hi-Tech Printing Company invents a new process that sharply reduces the cost of printing books. What happens to Hi-Tech’s profits and the price of books in the short run when Hi-Tech’s patent prevents other firms from using new technology? c. What happens in the long run when the patent expires and other firms are free to use the technology?arrow_forward
- Suppose the book-printing industry is competitive and begins in a long-runequilibrium.a. Draw a diagram showing the average total cost, marginal cost, marginal revenue,and supply curve of the typical firm in the industry.b. Hi-Tech Printing Company invents a new process that sharply reduces the cost ofprinting books. What happens to Hi-Tech’s profits and to the price of books in theshort run when Hi-Tech’s patent prevents other firms from using the new technology?c. What happens in the long run when the patent expires and other firms are free touse the technology?arrow_forwardPerfect competition is an extremely rare type of market in the real world. This is because the conditions necessary for perfect competition are difficult to meet. Write about an example of perfect competition (or at least a market that is very close to perfect competition). Find an example of a market that seems to be perfectly competitive. Explain how your example satisfies the four conditions necessary for perfect competition. Do sellers in the market you’ve described brand themselves to consumers? Does this support the idea that this market is perfectly competitive? Explain. Do different sellers in the market you’ve described charge different prices for their product? Does your answer support the idea that this market is perfectly competitive? Explain. Does it seem as if the example you mentioned is allocatively efficient? In other words, does the market produce enough of this good (or does it produce too much or too little)? Explain.arrow_forward. The market for fertilizer is perfectly competitive. Firms in the market are producing output, but they are currently making economic losses. a) How does the price of fertilizer compare to the average total cost, the average variable cost, and the marginal cost of producing fertilizer?b) Draw a graph, illustrating the present situation for the typical firm that is making losses.c) Assuming there is no change in demand or the firm's cost curves, explain what will happen in the long run to the price of fertilizer, marginal cost, average total cost, the quantity supplied by each firm, and the total quantity supplied to the marketarrow_forward
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