Initially, all firms in a perfectly competitive market are in long-run equilibrium. Assume that the market demand for the product produced by the firmsin the market suddenly rises.Suppose the following graph shows the marginal revenue (MR) and marginal cost (MC) curves of a firm in this market at its initial long-runequilibrium, with an equilibrium price of P₁ and a profit-maximizing quantity of output of Q₁.Show the short-run effect of the increase in market demand on this firm by shifting the marginal revenue curve, the marginal cost curve, or both onthe following graph.PRICE AND COST2MCQ₂QUANTITYIn the short run, the firm will respond by producingIn the long run, some firms will respond byPRICEMRQUANTITYSupplyMRDemandOShift the demand curve, the supply curve, or both on the following graph to illustrate both the short-run effects and the new long-run equilibriumafter firms finish adjusting to the increase in market demand.MCthe industry.Demandgoods andSupplyAssuming the firm that is in the industry before the change market demand continues to operate in the long run, it will respond by producingoutput than it did in the short-run equilibrium as indicated above.

Business economics requires making decisions and allocating resources in complex market scenarios.…

Initially, all firms in a perfectly competitive market are in long-run equilibrium. Assume that the market demand for the product produced by the firms in the market suddenly rises. Suppose the following graph shows the marginal revenue (MR) and marginal cost (MC) curves of a firm in this market at its initial long-run equilibrium, with an equilibrium price of P₁ and a profit-maximizing quantity of output of Q₁. Show the short-run effect of the increase in market demand on this firm by shifting the marginal revenue curve, the marginal cost curve, or both on the following graph. PRICE AND COST MC Q₂ QUANTITY In the short run, the firm will respond by producing In the long run, some firms will respond by PRICE MR QUANTITY Supply 6 6 Demand MR MC Shift the demand curve, the supply curve, or both on the following graph to illustrate both the short-run effects and the new long-run equilibrium after firms finish adjusting to the increase in market demand. the industry. -0 (?) Demand -0 Supply goods and ? Assuming the firm that is in the industry before the change in market demand continues to operate in the long run, it will respond by producing output than it did in the short-run equilibrium as indicated above.

Initially, all firms in a perfectly competitive market are in long-run equilibrium. Assume that the market demand for the product produced by the firms in the market suddenly rises. Suppose the following graph shows the marginal revenue (MR) and marginal cost (MC) curves of a firm in this market at its initial long-run equilibrium, with an equilibrium price of P₁ and a profit-maximizing quantity of output of Q₁. Show the short-run effect of the increase in market demand on this firm by shifting the marginal revenue curve, the marginal cost curve, or both on the following graph. PRICE AND COST MC Q₂ QUANTITY In the short run, the firm will respond by producing In the long run, some firms will respond by PRICE MR QUANTITY Supply 6 6 Demand MR MC Shift the demand curve, the supply curve, or both on the following graph to illustrate both the short-run effects and the new long-run equilibrium after firms finish adjusting to the increase in market demand. the industry. -0 (?) Demand -0 Supply goods and ? Assuming the firm that is in the industry before the change in market demand continues to operate in the long run, it will respond by producing output than it did in the short-run equilibrium as indicated above.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter12: The Partial Equilibrium Competitive Model

Section: Chapter Questions

Problem 12.9P

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