If there were 10 firms in this market, the short-run equilibrium price of steel would be $______per ton. At that price, firms in this industry would ______(shut down/operate at a loss/ earn a positive profit/ earn zero profit). Therefore, in the long run, firms would__________(enter/ exit/ neither enter nor exit) the steel market. Because you know that competitive firms earn______(zero/ negative/ positive) economic profit in the long run, you know the long-run equilibrium price must be $_____per ton. From the graph, you can see that this means there will be_____(10/20/30) firms operating in the steel industry in long-run equilibrium.
If there were 10 firms in this market, the short-run equilibrium price of steel would be $______per ton. At that price, firms in this industry would ______(shut down/operate at a loss/ earn a positive profit/ earn zero profit). Therefore, in the long run, firms would__________(enter/ exit/ neither enter nor exit) the steel market. Because you know that competitive firms earn______(zero/ negative/ positive) economic profit in the long run, you know the long-run equilibrium price must be $_____per ton. From the graph, you can see that this means there will be_____(10/20/30) firms operating in the steel industry in long-run equilibrium.
Chapter12: The Partial Equilibrium Competitive Model
Section: Chapter Questions
Problem 12.6P
Related questions
Question
If there were 10 firms in this market, the short-run equilibrium price of steel would be $______per ton. At that price, firms in this industry would ______(shut down/operate at a loss/ earn a positive profit/ earn zero profit). Therefore, in the long run, firms would__________(enter/ exit/ neither enter nor exit) the steel market.
Because you know that competitive firms earn______(zero/ negative/ positive) economic profit in the long run, you know the long-run equilibrium price must be $_____per ton. From the graph, you can see that this means there will be_____(10/20/30) firms operating in the steel industry in long-run equilibrium.
![The following diagram shows the market demand for steel.
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.
PRICE (Dollars per ton)
80
72
64
56
48
40
32
24
16
8
0
0
Demand
120 240 360 480 600 720 840 960 1080 1200
QUANTITY (Thousands of tons)
Supply (10 firms)
Supply (20 firms)
Supply (30 firms)
?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd2e5d5fa-1710-4491-be94-cde9e4b59811%2Fd02d55a4-56bc-420d-922a-29404cbc2f72%2F3349e5k_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The following diagram shows the market demand for steel.
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.
PRICE (Dollars per ton)
80
72
64
56
48
40
32
24
16
8
0
0
Demand
120 240 360 480 600 720 840 960 1080 1200
QUANTITY (Thousands of tons)
Supply (10 firms)
Supply (20 firms)
Supply (30 firms)
?
![7. Short-run supply and long-run equilibrium
Consider the competitive market for steel. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and
faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph.
COSTS (Dollars per ton)
80
72
64
56
48
40
32
24
16
8
0
04
MC
ATC
AVC
8 12 16 20 24 28
QUANTITY (Thousands of tons)
32
36 40
?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd2e5d5fa-1710-4491-be94-cde9e4b59811%2Fd02d55a4-56bc-420d-922a-29404cbc2f72%2F6bzsh9c_processed.jpeg&w=3840&q=75)
Transcribed Image Text:7. Short-run supply and long-run equilibrium
Consider the competitive market for steel. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and
faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph.
COSTS (Dollars per ton)
80
72
64
56
48
40
32
24
16
8
0
04
MC
ATC
AVC
8 12 16 20 24 28
QUANTITY (Thousands of tons)
32
36 40
?
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