Answer:
Price |
Qs(1 firm) |
Qs(20 firm) |
Qs(30 Firm) |
Qs(40 firm) |
10 |
10 |
200 |
300 |
400 |
15 |
15 |
300 |
450 |
600 |
30 |
20 |
400 |
600 |
800 |
40 |
22.5 |
450 |
675 |
900 |
70 |
27.5 |
550 |
825 |
1100 |
90 |
30 |
600 |
900 |
1200 |
If there were 20 firms in this market, the short-run equilibrium price of titanium would be $40 per pound. At that price, firms in this industry would make an economic profit (P > ATC i.e 40>30). Therefore, in the long run, firms would enter the titanium market.
Because you know that competitive firms earn zero economic profit in the long run, you know the long-run equillibrium price must be $30 per pound (P = ATC) . From the graph, you can see that this means there will be 30 firms operating in the titanium industry in long-run.
False
If implicit cost is positive than firm earn accounting profit in long run
7. Short-run supply and long-run equilibrium Consider the competitive market for titanium. Assume that, regardless of...
7. Short-run supply and long-run equilibrium Consider the competitive market for titanium. 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 pound) + MC O AVC 0 5 45 50 10 15 20 25 30 35 40 QUANTITY (Thousands of pounds) The following diagram shows the market...
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