7. The long-run supply curve in different cost industries The following graph shows the market for breakfast bar. Initially, the market is in a long-run equilibrium. Suppose that a change in tastes resulted in a rightward shift in demand. On the following graph, shift the demand or supply curve to reflect this change in tastes. Then use the grey point (star symbol) to indicate the new short-run equilibrium. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. PRICE (Dollars per box) 10 8 2 0 0 2 4 6 Short-run Supply D2 D₁ QUANTITY (Thousands of boxes) 8 10 Demand Short-run Supply Short-run Equilibrium Long-run Equilibrium Long-run Supply (?) In the short run, firms will suffer economic losses ▼ . In the long run, the supply curve will shift leftward On the previous graph, show the shift in the supply curve and then use the purple point (diamond symbol) to indicate the resulting new long- run equilibrium. Comparing the two long-run equilibria on the graph, you can see that the breakfast bar market is an example of an increasing-cost industry On the previous graph, use the green line (diamond symbols) to plot the long-run market supply curve for breakfast bars.
7. The long-run supply curve in different cost industries The following graph shows the market for breakfast bar. Initially, the market is in a long-run equilibrium. Suppose that a change in tastes resulted in a rightward shift in demand. On the following graph, shift the demand or supply curve to reflect this change in tastes. Then use the grey point (star symbol) to indicate the new short-run equilibrium. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. PRICE (Dollars per box) 10 8 2 0 0 2 4 6 Short-run Supply D2 D₁ QUANTITY (Thousands of boxes) 8 10 Demand Short-run Supply Short-run Equilibrium Long-run Equilibrium Long-run Supply (?) In the short run, firms will suffer economic losses ▼ . In the long run, the supply curve will shift leftward On the previous graph, show the shift in the supply curve and then use the purple point (diamond symbol) to indicate the resulting new long- run equilibrium. Comparing the two long-run equilibria on the graph, you can see that the breakfast bar market is an example of an increasing-cost industry On the previous graph, use the green line (diamond symbols) to plot the long-run market supply curve for breakfast bars.
Chapter11: Profit Maximization
Section: Chapter Questions
Problem 11.11P
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Transcribed Image Text:7. The long-run supply curve in different cost industries
The following graph shows the market for breakfast bar. Initially, the market is in a long-run equilibrium.
Suppose that a change in tastes resulted in a rightward shift in demand.
On the following graph, shift the demand or supply curve to reflect this change in tastes. Then use the grey point (star symbol) to indicate the new
short-run equilibrium.
Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move
to its original position, just drag it a little farther.
PRICE (Dollars per box)
10
0
0
2
4
6
Short-run Supply
D₂
D₁
QUANTITY (Thousands of boxes)
10
Demand
Short-run Supply
Short-run Equilibrium
Long-run Equilibrium
Long-run Supply
(?)
In the short run, firms will suffer economic losses ▼ . In the long run, the supply curve will shift leftward
curve and it snaps back
On the previous graph, show the shift in the supply curve and then use the purple point (diamond symbol) to indicate the resulting new long-
run equilibrium.
Comparing the two long-run equilibria on the graph, you can see that the breakfast bar market is an example of an increasing-cost industry
On the previous graph, use the green line (diamond symbols) to plot the long-run market supply curve for breakfast bars.
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