Chapter 8, Problem 15PAE

1)Which kind of industry would have a downward-sloping long-run supply curve?   Select one:   a. no industry   b. a decreasing cost industry   c. a constant cost industry   d. an increasing cost industry   2)The market for designer jeans is a good example of a perfectly competitive market.   Select one:   True   False   6)The long run is the period after all exit and entry has occurred.   Select one:   True   False

Perfectly Competitive Market Comapny: AMazon 1) Show the initial market equilibrium price and quantity in a graph for the market of your product and the profit-maximizing quantity in a graph for costs and revenue of your company in an initial long run equilibrium. Create a scenario that will shift the market demand to the right for your product. Show the change in the market demand, market price, and market quantity in a graph for the market of your product and a profit-maximizing quantity in a graph for your company in the short run.    2) Show the change in market supply, the market quantity, and the market price in the long run in a graph for the market of your product and show the change in costs and quantity in a graph for your company, assuming that this industry is an increasing cost industry. Show the long run market supply curve in a graph for the market of your product.

A perfectly competitive industry with constant costs initially operates in long-run equilibrium. When demand increases: A. in the long and short runs, prices and profits will be lower relative to what they were before the demand increase. B. in the short run, prices and profits will be higher, but in the long run, price will fall back to its original level and firms will again earn zero economic profit. C. in the short run, prices and profits will fall, but in the long run, price will rise back to its initial level, as will profits. D. in the long and short runs, prices and profits will be higher relative to what they were before the demand increase.