5. Moving from short-run to long-run equilibrium Suppose the competitive market for cat toys is in short-run equilibrium. The following graph on the left shows the demand and short-run supply for cat toys. Assume every firm in this industry is identical. The graph on the right shows the marginal cost (MC) and average cost (AC) curves for each firm in the long run. PRICE (Dollars per cat toy) 10 9 8 1 0 Short-Run Market Supply Demand H 0 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of cat toys per year) (?) COST (Dollars per cat toy) 10 9 8 1 0 0 MC Individual Firm AC 1 2 3 4 5 6 7 8 9 OUTPUT (Hundreds of cat toys per year) 10 ? image 1

5. Moving from short-run to long-run equilibrium Suppose the competitive market for cat toys is in short-run equilibrium. The following graph on the left shows the demand and short-run supply for cat toys. Assume every firm in this industry is identical. The graph on the right shows the marginal cost (MC) and average cost (AC) curves for each firm in the long run. PRICE (Dollars per cat toy) 10 9 8 1 0 Short-Run Market Supply Demand H 0 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of cat toys per year) (?) COST (Dollars per cat toy) 10 9 8 1 0 0 MC Individual Firm AC 1 2 3 4 5 6 7 8 9 OUTPUT (Hundreds of cat toys per year) 10 ? image 1

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Firms In Competitive Markets

Section: Chapter Questions

Problem 10PA

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Similar questions

Firms ill a perfectly competitive market are said to be price takers that is, once the market determines an equilibrium price for the product, firms must accept this price. If you sell a product in a perfectly competitive market, but you are not happy with its price, would you raise the price, even by a cent?
The following graph plots daily cost curves for a firm operating in the competitive market for demin overalls. Hint: Once you have positioned the rectangle on the graph, select a point to observe its coordinates. PRICE (Dollars per overalls) 50 45 40 35 15 10 5 0 0 2 MC ATC AVC 10 12 4 8 14 16 QUANTITY (Thousands of overallses per day) 18 20 In the short run, given a market price equal to $15 per overalls, the firm should produce a daily quantity of The rectangular area represents a short-run Profit or Loss On the preceding graph, use the blue rectangle (circle symbols) to fill in the area that represents profit or loss of the firm given the market price of $15 and the quantity of production from your previous answer. Note: In the following question, enter a positive number regardless of whether the firm earns a profit or incurs a loss. of $ overallses. thousand per day for the firm.
The following graph plots daily cost curves for a firm operating in the competitive market for jumpsuits. Hint: Once you have positioned the rectangle on the graph, select a point to observe its coordinates. PRICE (Dollars per jumpsult) 50 45 40 35 30 25 20 15 10 5 10 W 0 Y ATC AVC 2 MC 4 8 QUANTITY (Thousands of jumpsuits per day) 6 10 + 14 16 18 12 20 Profit or Loss In the short run, given a market price equal to $15 per jumpsuit, the firm should produce a daily quantity of of On the preceding graph, use the blue rectangle (circle symbols) to fill in the area that represents profit or loss of the firm given the market price of $15 and the quantity of production from your previous answer. Note: In the following question, enter a positive number regardless of whether the firm earns a profit or incurs a loss. The rectangular area represents a rt-run thousand per day for the firm. jumpsuits.
The following graph shows the daily cost curves of a firm operating in a perfectly competitive market. Suppose the market price for the good is $80 per unit. Use the blue rectangle (circle symbols) to shade the area representing the firm's profit or loss at the market price of $80 per unit if the firm chooses to produce the profit-maximizing quantity of output. PRICE AND COST (Dollars) 100 90 80 70 60 50 30 20 10 0 0 MC 5 ATC AVC 10 15 20 25 35 QUANTITY (Thousands of units) 30 At the market price of $80 per unit, this firm will 40 45 50 Profit or Loss and will in the short run.
The following graph shows the long-run supply curve for persimmons. Place the orange line (square symbol) on the following graph to show the most likely short-run supply curve for persimmons. (Note: Place the points of the line either on W and R or on W and M.) PRICE (Dollars per pound) 24 20 16 6 2 co 4 0 0 W 4 M R Long-Run Supply 2 6 8 10 QUANTITY (Thousands of pounds of persimmons) 12 Short-Run Supply ?
O Macmillan Learning The graph contains individual supply curves for the only two firms in a hypothetical market for stuffed animals. Place the market supply curve at the correct location on the graph. Then, consider what would happen to the market if a third supplier enters the market, holding all else constant. Price per Stuffed Animal($) 10 9 8 50 2 1 Market for Stuffed Animals Firm 1 Firm 2 Market 0 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Quantity of Stuffed Animals A third firm would mean market supply increases.
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Suppose that the market for candles is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. Hint: After placing the rectangle on the graph, you can select an endpoint to see the coordinates of that point. 40 36 Profit or Loss 32 28 24 20 ATC 16 12 AVC MC 4 8 2 4 6 QUANTITY (Thousands of candles per day) 10 12 14 16 18 20 In the short run, at a market price of $20 per candle, this firm will choose to produce candles per day. On the preceding graph, use the blue rectangle (circle symbols) to shade the area representing the firm's profit or loss if the market price is $20 and the firm chooses to produce the quantity you already selected. Note: In the following question, enter a positive number, even if it represents a loss. The area of this rectangle indicates that the firm's would be S thousand per day in the short run. PRICE (Dollars per candle)
The following graph shows the short-run supply curve for peca Place the orange line (square symbol) on the following graph to show the most likely long-run supply curve for pecans. (Note: Place the points of the line either on N and G or on N and Z.) PRICE (Dollars per pound) 24 20 16 12 N D G Short-Run Supply 10 QUANTITY (Thousands of pounds of pecans) Long-Run Supply ?
Farmer Lee grows strawberries. The average total cost and marginal cost of growing strawberries in the long run for an individual farmer are illustrated in the graph to the right. Suppose the market price is $7.05 per box. If so, then farmers will strawberries until the market price is $ number rounded to two decimal places.) per box. (Enter a numeric the market for a real enter exit Price and cost (dollars per box) 10- 9- 8- 5- 3- 2- 1. 0 MC ATC 10 20 30 40 50 60 70 80 90 100 Quantity of strawberries (boxes per week) o