2. The market situation is the perfectly competitive market for beef. Suppose the beef industry is an constant-cost perfectly competitive industry that is currently in long-run equilibrium. Part 1: Now suppose that demand for beef increases and firms are earning a positive economic profit. Illustrate the change in demand in your diagram and label the demand curve as D2. Part 2: Illustrate how the market adjusts to long-run equilibrium. Identify the new equilibrium quantity and price combination (E2).

2. The market situation is the perfectly competitive market for beef. Suppose the beef industry is an constant-cost perfectly competitive industry that is currently in long-run equilibrium. Part 1: Now suppose that demand for beef increases and firms are earning a positive economic profit. Illustrate the change in demand in your diagram and label the demand curve as D2. Part 2: Illustrate how the market adjusts to long-run equilibrium. Identify the new equilibrium quantity and price combination (E2).

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 1SCQ: Firms ill a perfectly competitive market are said to be price takers that is, once the market...

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Firms ill a perfectly competitive market are said to be price takers that is, once the market determines an equilibrium price for the product, firms must accept this price. If you sell a product in a perfectly competitive market, but you are not happy with its price, would you raise the price, even by a cent?
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