čompetitive tirm's short run equilibrium level of output: P=MR=MC=DATC results in the firm earning a normal profit. 17. Firm Short Run Equilibrium occurs at MR= MC. Market Firm Marginal Cost 18. Remember that it is assumed that the firm earns a normal profit. 19. Normal profit is included in ATC. Supply Average Total Cost 20. Thus, when MR=MC=ATC the firm is p earning a normal profit at output q". Demrand= Marginal Revenue 21. Multiple q by the number of firms in the industry will determine market output Q. Derrand Q' q* D 4:32 / 4:38 * YouTube CC 75. In the video, to Determine the level of Q* you must multiple q* by Select one: a. Price of product b. Number of Firms in Market c. Marginal Revenue d. Not Possible

PRICE (Cents per bushel) COST (Cents per bushel) 100 90 80 70 60 50 ATC 40 30 20 10 AVC MC 0 5 10 15 20 25 30 35 40 45 50 OUTPUT (Thousands of bushels) The following graph shows the market demand for wheat. 1. Use the orange points (square symbol) to plot the short-run industry supply curve for the wheat industry. Specifically, place an orange point at the lowest point of the supply curve and another orange point at the highest point of the supply curve. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output, since this is the industry supply curve. Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.) 2. Place the black point (plus symbol) on the graph to indicate the short-run equilibrium price and quantity in this market. (Note: Dashed drop lines will automatically extend to both axes.) 100 90 80 60 30 20 2 2 2 2 8 8 2 2 2 2 ° 0 Demand 350 700 1050 1400 1750…

In a perfectly competitive market: the market price is 28 Marginal cost (MC) = 2(Q) + 8 average total cost at equilibrium is 28, and average variable cost at equilibrium is 7 The profit maximizing price is Number The profit maximizing quantity is Number :Total revenue is Number Total cost is Number Average fixed cost is Number Total fixed cost is Number Total profit/loss is Number Marginal ravenue is Number At this market price,over time, firms would: 1. Enter the industry 2. leave the industry 3. There is no incentive to enter or leave the industry. Number (assume all firms have the same cost structure) :At the market price, could this be a long run equilibrium price? (if yes=1, no=D2) (assume all firms have the same cost structure) Number

Suppose there are 5 firms in this industry, each of which has the cost curves previously shown.