EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Chapter 8, Problem 9RQ
To determine
Explain with reasons for the economists believing positive slopes of the short run marginal cost curves.
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Consider the equilibrium depicted as your final short-run equilibrium (SRE). Is your price depicted in P2, a Long Run Equilibrium price for the natural gas industry? If so, explain why. If P2 is not a Long Run Equilibrium price, please explain what changes must take place to return the industry to long run equilibrium. As part of these changes, what, if anything, will happen to the supply curve, market price, the optimal output of an individual firm, the total number of firms in the industry, and the individual firm’s profit?
assume the natural gas industry is perfectly competitive, demand is downward sloping, supply is upward sloping, and production technology results in traditional U-shaped ATC and AVC curves.
market price is always greater than the minimum of the AVC curve.
Chapter 8 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 8.3 - Prob. 1MQCh. 8.3 - Prob. 2MQCh. 8.3 - Prob. 1.1MQCh. 8.3 - Prob. 2.1MQCh. 8.4 - Prob. 1TTACh. 8.4 - Prob. 2TTACh. 8.4 - Prob. 1MQCh. 8.4 - Prob. 2MQCh. 8.5 - Prob. 1TTACh. 8.5 - Prob. 2TTA
Ch. 8.5 - Prob. 1.1TTACh. 8.5 - Prob. 2.1TTACh. 8.5 - Prob. 1MQCh. 8.5 - Prob. 2MQCh. 8 - Prob. 1RQCh. 8 - Prob. 2RQCh. 8 - Prob. 3RQCh. 8 - Prob. 4RQCh. 8 - Prob. 5RQCh. 8 - Prob. 6RQCh. 8 - Prob. 7RQCh. 8 - Prob. 8RQCh. 8 - Prob. 9RQCh. 8 - Prob. 10RQCh. 8 - Prob. 8.1PCh. 8 - Prob. 8.2PCh. 8 - Prob. 8.3PCh. 8 - Prob. 8.4PCh. 8 - Prob. 8.5PCh. 8 - Prob. 8.6PCh. 8 - Prob. 8.7PCh. 8 - Prob. 8.8PCh. 8 - Prob. 8.9PCh. 8 - Prob. 8.10P
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- Q46 Why do we refer to the long-run average cost curve as a "boundary"? a. The points below the curve represent cost levels that are unattainable given current technology and factor prices. b. The points above the curve represent cost levels attainable to the firm only with adjustment of all factor prices. c. The points above the curve represent costs that are unattainable given current technology and factor prices. d. None of the other options are correct. e. The points on the curve represent a boundary between fixed factor prices and variable factor prices. Clear my choicearrow_forwardCan you please assist me with these? Why will firms in most markets be located at or close to the bottom of the longrun average cost curve? Distinguish between implicit and explicit costs. How is it possible to have positive accounting profit and negative economic profit concurrently? Distinguish between economies of scale and constant returns to scale. What shape will the long-run average cost curve have for economies of scale and constant returns to scale.arrow_forwardDistinguish between short-run and long-run supply curves.arrow_forward
- Consider the equilibrium depicted as your final short-run equilibrium (SRE) in Question 3. Is your price depicted in Question 3, P2, a Long Run Equilibrium price for the natural gas industry? If so, explain why. If P2 is not a Long Run Equilibrium price, please explain what changes must take place to return the industry to long run equilibrium. As part of these changes, what, if anything, will happen to the supply curve, market price, the optimal output of an individual firm, the total number of firms in the industry, and the individual firm’s profit? Assume the natural gas industry is still living with the short-run supply disruption. Then unusually warm weather causes demand for natural gas to decrease unexpectedly. Analyze the impact of this reduction in demand in for natural gas. For this analysis, assume the natural gas industry is perfectly competitive, demand is downward sloping, supply is upward sloping, and production technology results in traditional U-shaped ATC and AVC…arrow_forwardWhich of the following represents a long-run decision for the firm? a. rehiring workers who were previously laid off. b. determining what price to charge for a given level of output. c. deciding how much output to supply to the market at the current market price. d. building another wing on the plant in order to add a new assembly line. answer. (d. building another wing on the plant in order to add a new assembly line.) Please help me explain this questions. Thanks in advancearrow_forward1. Suppose marginal cost and average cost are given by the following expressions: MC(x)=3x1/2, AC(x)=2x1/2. What is the profit maximising quantity when p=$3?2. Suppose marginal cost and average cost are given by the following expressions: MC(x)=3x1/2, AC(x)=2x1/2. What is the value pf the long-run break-even price?3. For any given level of the price of output, the supply curve of a producer tells the producer the amount of output to produce in order to maximise profits a. True b. Falsearrow_forward
- For each of the following events identify which of the determinates of demand or supply are affected. Also indicate whether demand or supply is increased or decreased. Why? A stock market crash lowers people’s wealth. Batelco increases the prices of mobile services. Diminishing returns mean rising costs while economies of scale mean falling costs. Therefore, a firm cannot be facing both diminishing returns and economies of scale. Do you agree? Why or why not?arrow_forwardDiscuss why the long-run ATC curve is generally U-shapedarrow_forwardExplain why a long-run supply curve might slope upward.arrow_forward
- For a perfectly competitive firm to operate and produce an output level in the short-run, the firm's Price must be greater than, or equal to, what cost for the firm?arrow_forwardEconomics At a price of $21 will the firm produce in the short run? If so, what is the profit or loss? Same questions as #1 except use a price of $34? Same questions as #1, except use a price of $45? From the information in the table, can you determine the short run supply curve? If so, what would it be? What would happen at the $45 price level in the long run, to profits, price, number of firms in the industry, assuming constant costs?arrow_forwardThe following graph shows the long-run supply curve for pears. Place the orange line (square symbol) on the following graph to show the most likely short-run supply curve for pears. (Note: Place the points of the line either on I and F or on I and C.) Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forward
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