Question

Introduction to Microeconomics Deriving the Short-Run Supply Curve for the Perfectly Competitive Firm Cost (5) 0 10 20 30 40 50 60 70 80 90 100 110 Outputs tunits) The figure illustrates the costs faced by a perfectly competitive firm. Use the figure to answer the following: 1) Between the prices $10 and $15, what is the goal of the producer? 2) If new firms enter the industry, explain what will happen to the firms already in the industry. Use the supply and demand model to support your answer.

Answer 1

D Between price (P). $10 an se greater than the ween $ 10 and $15. ATC will be greater than the So, profits will be negative. Thus, the goal of the - producer will be to minimize the losses. 2) As new firms enter the industry supply will in So, supply curre will shift downward to the right This will decrease the price . So, the profit g already existing firms I will decline. Price Industry Me ato XY - - BALB// HMR, =P - - - MR2 = Firm ē Quantity coes Profits of nedenisiting firm will decrease ElupamScanner du q from AB CD to