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 candisregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use thepurple points (diamond symbol) to plot the short-run industry supply curve when there are 20 firms. Finally, use the green points (triangle symbol) toplot the short-run industry supply curve when there are 30 firms.PRICE (Dollars per ton)807264564840322416800Demand120 240 360 480 600 720 840 960 1080 1200QUANTITY (Thousands of tons)Supply (10 firms)Supply (20 firms)Supply (30 firms)? 7. Short-run supply and long-run equilibriumConsider the competitive market for steel. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical andfaces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph.COSTS (Dollars per ton)8072645648403224168004MCATCAVC8 12 16 20 24 28QUANTITY (Thousands of tons)3236 40?

In economics, a competitive market is a market where many sellers compete with each other to sell…

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.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter12: The Partial Equilibrium Competitive Model

Section: Chapter Questions

Problem 12.6P

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