Question

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. 100 90 80 5 70 60 t o 50 tso 030 20 10 마 AVC 0 10 20 30 40 50 60 0 80 90 100 QUANTITY (Thousands of pounds) The following diagram shows the market demand for titanium.

First Blue blank choices: earn a positive profit, operate at a loss, earn zero profit, shut down.

Second Blue Blank Choices: enter, exit, neither enter nor exit

Third Blue Blank Choices: negative, positive, zero

Last Blank: 10, 15, 20

Answer 1

P	QS-1 FIRM	QS-10 FIRMS	QS-15 FIRMS	QS-20 FIRMS
10	0	0	0	0
15	30000	300000	450000	600000
30	40000	400000	600000	800000
40	45000	450000	675000	900000
70	55000	550000	825000	1100000
90	60000	600000	900000	1200000

Supply (10 firms) Supply (15 firms) PRICE (Dollars per pound) Supply (20 firms) Demand 0 125 250 375 500 625 750 875 1000 1125 1250 QUANTITY (Thousands of pounds)

Blanks:-

1) 40

2)  earn a positive profit

3) enter

4) zero

5) 30

6) 15 firms

the statement is true