PRICE (Dollars per pound) COSTS (Dollars per pound) 90 BO 70 60 50 20 2 2 2 2 20 ATC 10 MC AVC 0 5 10 15 25 30 35 45 QUANTITY (Thousands of pounds) The following graph plots the market demand curve for ruthenium. 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 can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 20 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 30 firms. 10 ° 100 80 70 60 50 40 Demand 30 125 250 375 500 625 750 875 1000 1125 1250 QUANTITY (Thousands of pounds) Supply (30 firms) Supply (20 firms) Supply (10 firms) 1.1.1. If there were 10 firms in this market, the short-run equilibrium price of ruthenium would be $ per pound. At that price, firms in this industry would Therefore, in the long run, firms would the ruthenium market. economic profit in the long run, you per pound. From the graph, you can see firms operating in the ruthenium industry in long-run Because you know that competitive firms earn know the long-run equilibrium price must be $ that this means there will be 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.
PRICE (Dollars per pound) COSTS (Dollars per pound) 90 BO 70 60 50 20 2 2 2 2 20 ATC 10 MC AVC 0 5 10 15 25 30 35 45 QUANTITY (Thousands of pounds) The following graph plots the market demand curve for ruthenium. 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 can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 20 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 30 firms. 10 ° 100 80 70 60 50 40 Demand 30 125 250 375 500 625 750 875 1000 1125 1250 QUANTITY (Thousands of pounds) Supply (30 firms) Supply (20 firms) Supply (10 firms) 1.1.1. If there were 10 firms in this market, the short-run equilibrium price of ruthenium would be $ per pound. At that price, firms in this industry would Therefore, in the long run, firms would the ruthenium market. economic profit in the long run, you per pound. From the graph, you can see firms operating in the ruthenium industry in long-run Because you know that competitive firms earn know the long-run equilibrium price must be $ that this means there will be 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.
Chapter8: Perfect Competition
Section: Chapter Questions
Problem 7.15P
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Transcribed Image Text:PRICE (Dollars per pound)
COSTS (Dollars per pound)
90
BO
70
60
50
20
2 2 2 2 20
ATC
10
MC
AVC
0
5 10 15
25 30
35
45
QUANTITY (Thousands of pounds)
The following graph plots the market demand curve for ruthenium.
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 can disregard the portion of the supply curve that
corresponds to prices where there is no output since this is the industry supply curve.) Next, use
the purple points (diamond symbol) to plot the short-run industry supply curve when there are 20
firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve
when there are 30 firms.
10
°
100
80
70
60
50
40
Demand
30
125 250 375 500 625 750 875 1000 1125 1250
QUANTITY (Thousands of pounds)
Supply (30 firms)
Supply (20 firms)
Supply (10 firms)
1.1.1.
If there were 10 firms in this market, the short-run equilibrium price of ruthenium would
be $
per pound. At that price, firms in this industry would
Therefore, in the long run, firms would
the ruthenium market.
economic profit in the long run, you
per pound. From the graph, you can see
firms operating in the ruthenium industry in long-run
Because you know that competitive firms earn
know the long-run equilibrium price must be $
that this means there will be
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.
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