Draw a diagram for a perfectly competitive industry with firms earning normal profits in the long run. Assume that all firms in the industry use oil as key inputs. Using an appropriate diagram, illustrate an increase in the price of inputs. Will firmlevel profits increase or decrease and will market supply increase or decrease?
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Draw a diagram for a
profits in the long run. Assume that all firms in the industry use oil as key inputs.
Using an appropriate diagram, illustrate an increase in the price of inputs. Will firmlevel profits increase or decrease and will market supply increase or decrease?
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- Draw a diagram for a perfectly competitive industry with firms earning normal profits in the long run. Assume that all firms in the industry use oil as key inputs. Using an appropriate diagram, illustrate an increase in the price of inputs. Will firm- level profits increase or decrease and will market supply increase or decrease?(a) Let the industry producing soybeans be in a long-run equilibrium. What is the equilibrium price of a bushel of soybeans? How many billions of bushels are produced? How many farmers are there in the industry? What is the shipping fee per bushel of soybeans? (b) Suppose that the demand for soybeans drops due to decreased im- port by China and becomes Q = 15.3 − p. In a new long run equilibrium, what is the equilibrium price of a bushel of soybeans? How many billions of bushels are produced? How many farmers are there in the industry? What is the shipping fee per bushel? (c) Calculate the change in the producers’ surplus between the situations described in (a) and (b). (d) Show that the decrease in the producers’ surplus equals to the decrease in the total shipping fees as the industry contracts incrementally from the equilibrium output in (a) to the equilibrium output in (b).How does an increase in market demand for a product in a perfectly competitive market affectthe short-run and long-run equilibrium? Show on a diagram and discuss the adjustments firms make in terms of price and quantity to reach the new equilibrium. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
- Be sure to label the graphs. Suppose in the competitive market for a good known as “Tovars” that there are 5,000 firms. Assuming each firm is at a point where P=ATC. Suddenly, a huge number of entrepreneurs enters the market so the number of firms increases by 1,000. a. Please draw a graph showing the short run effect. Please label the price and quantities initially as P1, q1, Q1 and the short run price and quantities as P2, q2, Q2 b. On the graph in a, please show the long run effect. Please label the long run price and quantities as P3, q3, Q3. Relative to the initial equilibrium (before the entrance of 1,000 firms), What happens to the P? What happens to the q? What happens to the Q?The following problem traces the relationship between firm decisions, market supply, and market equilibrium in a perfectly competitive market. a. Complete the following table for a single firm in the short run. Using the information in the table, fill in the following supply schedule for this individual firm under perfect competition and indicate profit (positive or negative) at each output level. (Hint: At each hypothetical price, what is the MR of producing 1 more unit of output? Combine this with the MC of another unit to figure out the quantity supplied.)1) Graphite is an input into the production of pencils. If the pencil market is perfectly competitive, then in the short-run an increase in the price of graphite will cause: (a) The supply curve for pencils to shift up: True or False? (b) An increase in the market price for pencils. True or False? (c) The demand curve for pencils to shift down. True or False? For each of (a), (b), and (c) above, indicate whether the statement is True or False? Explain each briefly. Provide a graph illustrating your answer
- What happens when more and more firms enter an industry? a) Decline in economic profits b) An increase in the accounting profits c) An increase in price d) A decline in production Answer A В DGive an example of a firm which competes in a competitive market. Explain. Suppose that the this market begins in long run equilibrium. Give an example of a factor that would cause the demand curve in this market to shift to the left. How will the market return to the long run equilibrium?1-> O O O O Suppose the market for peaches is perfectly competitive. The short-run average total cost and marginal cost of growing peaches for an individual grower are illustrated in the figure to the right. Assume that the market price for peaches is $6.50 per box. What is the profit-maximizing quantity for peach growers to produce? boxes. (Enter your response as an integer.) At this level of output, profit will be $. (Enter your response rounded to the nearest dollar.) Peach growers will earn positive economic profit in the short run at any market price above $ per box. (Enter your response rounded to one decimal place.) Price (dollars per box) 10- 9- 8- 7- 6- 4- 3- 2- 1 0 MC ATC 10 20 30 40 40 50 60 70 80 90 100 Output (boxes of peaches per day) Q Next
- Discuss the situation facing firms in competitive markets. Why is it said that they are "price takers" and unable to influence the market price? If firms in competitive markets cannot effectively choose the price of their output, what do they decide? What determines the level of output that they produce? Next, think of or research some examples of firms that might decide to shut down in the short run. What do you think would make them choose this course of action? Discuss the industry and firms in it, along with the conditions prompting the potential shutdowns. Could seasonality in demand be a potential factor? Explain. What is the exact price for the product that is referred to as the “shut down” point in the short run? When would a seller possibly decide to exit the industry over the long run? What should product price be compared to when assessing whether there is a profit or loss? Can you think of any examples of declining industries? Explain.A new korean restaurant opens in a city. People are initially cautious about eating newfood items, until an influential health report warns consumers against korean foodsuggest that they decrease their consumption of Korean foods. As a result, demand forKorean cuisine decreases dramatically.Assuming that the market for Korean food is perfectly competitive, answer thequestions below.a. In the story above, what should have happened to the short-run economic loss of theKorean restaurant as a result of the health report?b. Assuming that demand remains low, what do you anticipate will happen to thenumber of korean restaurants in the city over the long run?c. Would you predict that the first korean restaurant would be able to still running inloss over the long run? Explain your answer.d. Using one graph of the market as a whole and one graph of a representative firm'scost curves, illustrate your answers to parts a - c. (Draw diagram of a, b and c and labelyour diagram).e. Local…A new korean restaurant opens in a city. People are initially cautious about eating newfood items, until an influential health report warns consumers against korean foodsuggest that they decrease their consumption of Korean foods. As a result, demand forKorean cuisine decreases dramatically.Assuming that the market for Korean food is perfectly competitive, answer thequestions below.a. In the story above, what should have happened to the short-run economic loss of theKorean restaurant as a result of the health report?