Dear pro bro hero expert Hand written solution is not allowed. 7. Short-run supply and long-run equilibriumConsider the competitive market for rhenium. Assume that no matter how many firms operate in the industry, every firm is identical and faces thesame marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves plotted in the following graph.COSTS (Dollars per pound)10090706020ATC10MCAVC☐о051020 25 30 35 404550QUANTITY (Thousands of pounds)The following graph plots the market demand curve for rhenium.Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 10 firms in the market. (Hint: You candisregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use thepurple points (diamond symbol) to plot the short-run industry supply curve when there are 20 firms. Finally, use the green points (triangle symbol) toplot the short-run industry supply curve when there are 30 firms.PRICE (Dollars per pound)10088 22 8 2 2 %90Supply (10 firms)Supply (20 firms)40DemandSupply (30 firms)20100250 375 500 625 750 875 1000 1125 1250QUANTITY (Thousands of pounds)If there were 20 firms in this market, the short-run equilibrium price of rhenium would be SwouldTherefore, in the long run, firms wouldBecause you know that competitive firms earnper pound. At that price, firms in this industrythe rhenium market.economic profit in the long run, you know the long-run equilibrium price must beper pound. From the graph, you can see that this means there will befirms operating in the rhenium industry in long-runequilibrium.True or False: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns positive accounting profit.TrueFalse

Competitive market is a market where there are large number of firms and each firm is producing an…

7. Short-run supply and long-run equilibrium Consider the competitive market for rhenium. Assume that no matter how many firms operate in the industry, every firm is identical and faces the same marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves plotted in the following graph.

7. Short-run supply and long-run equilibrium Consider the competitive market for rhenium. Assume that no matter how many firms operate in the industry, every firm is identical and faces the same marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves plotted in the following graph.

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: Firms In Competitive Markets

Section: Chapter Questions

Problem 9PA

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