PLEASE ANSWER WITH GRAPH: Suppose that an industry is initially at a long-run competitive equilibrium. Originally,firms in the industry had very low fixed costs, but due to a new law, firms' fixed costs increased significantly. Throughoutall these changes, the industry remains competitive. Graphically show how this new law changes the industry in both theshort run and long run. To receive full credit, you must: Correctly show how the law changed the MC, AVC, ATC, LRS,Demand and Short - Run Supply Curves (if at all). Correctly show profits at the firm level immediately after the new lawis put in place and in the long run. Correctly show how the market will adjust to the new long-run competitiveequilibrium. Clearly show how the long-run equilibrium market quantity and market price

here are the graphs illustrating the changes in the industry due to an increase in fixed costs:…

Answered: PLEASE ANSWER WITH GRAPH: Suppose that…

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter9: Perfect Competition

Section: Chapter Questions

Problem 13QP

See similar textbooks

Similar questions

What is the long-run equilibrium for a perfectly competitive market? How do entry and exit affect these? Is this different for increasing and decreasing cost industries than it is for constant cost industries? Be able to graph the market and firm, side-by-side, in the short-run and the long-run
Economics Now having some knowledge of perfect competition and how/why it's generally experienced only in commodity markets, and that's not an absolute, discuss why the market for housing -though competitive- doesn't function under the theory of perfect competition. Hint: take each of the tenets of perfect competition and ask yourselves (for example) "Are all house the same (homogenous)?"; "Do sellers face buyers with 'few' choices?" -get the idea? In essence, you're describing why real estate isn't perfectly competitive and how those characteristics we studied often do not apply. Enjoy the learning!
Graph represents the cost structure of an individual firm in a perfectly competitive market. If the price decreases to $25, Considering the short-run: would firm earn positive or negative profit in this new scenario? Would it continue operating or stop production? Considering the long-run: would new firms enter to the market or would existing firms exit from it? What would happen to the market equilibrium?
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…
Discuss the situation facing firms in competitive markets. Why is it said that they are "price takers" and unable to influence the market price? If firms in competitive markets cannot effectively choose the price of their output, what do they decide? What determines the level of output that they produce? Next, think of or research some examples of firms that might decide to shut down in the short run. What do you think would make them choose this course of action? Discuss the industry and firms in it, along with the conditions prompting the potential shutdowns. Could seasonality in demand be a potential factor? Explain. What is the exact price for the product that is referred to as the “shut down” point in the short run? When would a seller possibly decide to exit the industry over the long run? What should product price be compared to when assessing whether there is a profit or loss? Can you think of any examples of declining industries? Explain.
In the short-run, if the marginal cost of a firm in a competitive industry is upward sloping while itsaverage variable cost is downward sloping, what can you say about slope of average total cost?
Farmer Lee grows strawberries. The average total cost and marginal cost of growing strawberries in the long run for an individual farmer are illustrated in the graph to the right. Suppose the market price is $7.05 per box. If so, then farmers will strawberries until the market price is $ number rounded to two decimal places.) per box. (Enter a numeric the market for a real enter exit Price and cost (dollars per box) 10- 9- 8- 5- 3- 2- 1. 0 MC ATC 10 20 30 40 50 60 70 80 90 100 Quantity of strawberries (boxes per week) o
Draw a diagram for a perfectly competitive industry with firms earning normalprofits in the long run. Assume that all firms in the industry use oil as key inputs.Using an appropriate diagram, illustrate an increase in the price of inputs. Will firmlevel profits increase or decrease and will market supply increase or decrease?
Whould you please correct the below Economic understanding: When ATC is decreasing MC < ATC => means Company is gianing profit where Revenue is more than producing cost. When ATC Increasing MC>ATC => means Company is losing OR making profit by reducing the production. please advise.
The number of firms in an industry is not always a good indicator of the extent to which that industry is competitive.” Do you agree with this statement?
Assuming that the CD manufacturing business is a perfectly competitive industry, explain why his sales are going down. Will you advise this customer to shut down his business or not?
Scenario 1-2Suppose a hat manufacturer currently sells 2,000 hats per week and makes a profit of $5,000 per week. The plant owner observes, "Although the last 300 hats we produced and sold increased our revenue by $1,000 and our costs by $1,100, we are still making an overall profit of $5,000 per week so I think we're on the right track. We are producing the optimal number of hats."Refer to Scenario 1-2. Using marginal analysis terminology, another economic term for the incremental cost of producing the last 300 hats is marginal cost. explicit cost. Any of the above terms are correct. operating cost.

SEE MORE QUESTIONS

Recommended textbooks for you

Microeconomics

Economics

ISBN:

9781337617406

Author:

Roger A. Arnold

Publisher:

Cengage Learning

Economics (MindTap Course List)

Economics

ISBN:

9781337617383

Author:

Roger A. Arnold

Publisher:

Cengage Learning

Microeconomic Theory

Economics

ISBN:

9781337517942

Author:

NICHOLSON

Publisher:

Cengage

Microeconomics

Economics

ISBN:

9781337617406

Author:

Roger A. Arnold

Publisher:

Cengage Learning

Economics (MindTap Course List)

Economics

ISBN:

9781337617383

Author:

Roger A. Arnold

Publisher:

Cengage Learning

Microeconomic Theory

Economics

ISBN:

9781337517942

Author:

NICHOLSON

Publisher:

Cengage

Exploring Economics

Economics

ISBN:

9781544336329

Author:

Robert L. Sexton

Publisher:

SAGE Publications, Inc

Principles of Economics 2e

Economics

ISBN:

9781947172364

Author:

Steven A. Greenlaw; David Shapiro

Publisher:

OpenStax

Economics:

Economics

ISBN:

9781285859460

Author:

BOYES, William

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS