Question 1 Consider the following statement of equalities: P = MC = minimum SRATC = minimum LRAC. This statement of equalities best applies to which of the following? O a perfectly competitive industry that is in short-run equilibrium O a perfectly competitive firm that is maximizing profits, which will lead other firms to enter this industry O a perfectly competitive firm when the industry is in long-run equilibrium O a perfectly competitive firm that is producing the optimal quantity, such that other firms will exit the industry O a perfectly competitive industry that is in long-run equilibrium
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- 13. Suppose a representative firm in a perfectly competitive industry has the following totalcost of production in the short run: TC=Q^3-40Q^2+600Q.a. What will be the long run equilibrium quantity for the firm? What will be the longrun equilibrium price in this industry?b. Let the industry demand be given by QD=12400-4P. How many firms will be activein the long-run equilibrium?c. Suppose the firm faces a positive demand shock that increases the industry demandto QD=16000-4P. Describe how the industry would respond and calculate thechange in the number of firms.Suppose that a competitive industry is buying and selling at an equilibrium price of $12. Now suppose that demand increases. If the market is an increasing cost industry, which of the following would we expect to happen in the long run? (select all that apply) The equilibrium price will be lower than $12 in the long run The equilibrium price will be at the minimum firm's LAC 0 The equilibrium price will stay at $12 in the long run The equilibrium price will be higher than $12 in the long runA market is said to be perfectly-competitive when: the market may be dominated by one or two major companies, but there are many smaller companies also in the market. there are any number of products, equivalent buying and selling prices, and individual buyers or sellers can affect those prices by their own actions. there is a homogeneous product, equivalent buying and selling prices, and no individual buyers or sellers can affect those prices by their own actions. there is no opportunity costs incurred by the vendor nor by the buyer. there are any number of products, equivalent buying and selling prices, and individual buyers or sellers can affect those prices by their own actions, but there are no opportunity costs for buyers or sellers.
- If there were 60 firms in this market, the short-run equilibrium price of titanium would be $________ per kilogram. At that price, firms in this industry would (earn a positive profit, shut down, earn zero profit, operate at a loss). Therefore, in the long run, firms would ( enter, exit, neither enter nor exit) the titanium market. Because you know that perfectly competitive firms earn (positive, zero, negative) economic profit in the long run, you know the long-run equilibrium price must be $_______ per kilogram. From the graph, you can see that this means there will be (20, 40, 60) firms operating in the titanium industry in long-run equilibrium.Assume the purely competitive market is in long-run equilibrium. For some reason market demand increases. What would happen? Group of answer choices Market prices would fall, causing producers to reduce output. All economic losses are incurred, firms start leaving the market. At first, all firms would achieve economic profit, but eventually economic profit would fall back to zero as new firms enter the market. An increase in market demand would not produce any change in price, production, or the movement of firms in and out of the market. Market price would increase, and producers would band together to prevent new entrants to the market.Assume that pencils are manufactured in a perfectly competitive market that is in long-run equilibrium. (a) Draw correctly labeled side-by-side graphs for the brooms market and for a representative firm and show each of the following.: (i) The market price and quantity, labeled PM and QM, respectively (ii) The firm's profit-maximizing price and quantity, labeled Pp and Qp, respectively (b) What is the relationship between PM and Pp? Explain in words. ( c) Rent on the factory building is an important fixed cost in the production of pencils, and the industry experiences significant increases in rent. (i) What will happen to the firm's profit-maximizing quantity in the short run? Explain. (ii) On your graph in part (a), show the impact of the rent increase and completely shade the area representing the firm's profit or loss in the short run. ( d) As a result of the rent increase, what will happen to each of the following in the long run? (i) The number of firms in the market. Explain.…
- Mr DIY is a new small scale palm oil supplier. There are many small scale palm oil suppliers in the market. The price of oil palm is solely determined by the market demand and supply. Describe the perfectly competitive market of this industry. As Mr DIY is a new firm in the market, his firm is facing a problem of revenue lesser than the total variable costs. Illustrate the situation with an appropriate diagram(s). Evaluate the situation of this firm and provide one suggestion for the firm to sustain in the long run.Questio Suppose that the price of corn, a crop produced in a perfectly (or purely) competitive industry, increased 208% last year as demand for corn-based ethanol fuel increased. What do you expect to happen in the long run for the corn industry given this recent success? The price per bushel of corn will continue to increase, yielding higher profits. Thus, more firms will enter the market indefinitely. Profits will become negative due to overfarming, which will result in the corn farming industry going under. Profits will be equal to zero. None of the above. Suppose the firms in the market for bacon, also a perfectly (or purely) competitive industry, experienced losses last quarter due to people becoming increasingly concerned about how high-fat diets negatively impact health. What do you expect to happen in the long run for the bacon industry? Seeing this as an opportunity to monopolize a fledging industry, firms will enter the industry, shifting supply to the right. Profits will…3. Technology for producing q gives rise to the cost function c(q) = aq+ bq². The market demand for q is p = a - Bq. (a) If a > 0, if b 0 and b 0 and b >0, what is the long run equilibrium market price and number of firms? Explain.
- Short-run supply and long-run equilibrium Consiber the competitive market for rhodium. Assume that no matter how many firms operate in the induatry, every firm is identical and faces the same marpinal cost (MC), averapt total cost (ATC), and average variable cost (AVC ) curves plotted in the following praph. The following graph plots the market demand curve for thodium. If there were 10 firms in this market, the short-run equilibrium price of rhodium would be per pound. At that price, firms in this industry would. Therefore, in the long run, firms would the rhodium market. Because you know that competitive firms earn economic profit in the long run, you know the long-run equilibrium price must be per pound. From the graph, you can see that this means there will be firms operating in the rhodium industry in long-run equilibrium. True or False: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns positive accounting profit. True FalsePerfectly 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.Unit 10 - Competition - Microeconomics The market for coffee near Sarbucks stores is perfectly competitive (all firms are price takers). Graph the long-run market equilibrium for coffee and for Sarbucks as an individual firm in this market in spaces below. Make sure to identify the market S&D, firm S&D, and firm ATC and AVC curves. How much profit is the firm making? Discuss with your group why this profit is synonymous with being in a long-run equilibrium. Now suppose that coffee shop coffee is a normal good and income goes up. Starting from the diagram in (1), 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…