Question

super positive i did this wrong. please help.

71:06 supply and long-run equillbrium i Consider a perfectly competitive market for titanium. Assume that all firms in the industry are identical and have the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. Assume also that it does not matter how many firms are in the industry Tool Tip: Place the mouse cursor over orange square points on the MC curve to see coordinates. 10 MC ATC AVC 0 5 10 15 20 25 30 35 40 45 50 UNITS OF OUTPUT IThousands of pounds per dayl The following diagram shows the market demand for titanium. Use the orange points (square symbol) to plot the nitial short-run industry supply curve when there are 20 firms in the market. (Note: Ignore the portion of the supply curve that corresponds to prices at which there is no output, since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 30 firms. Finally, use the red points (cross symbol) to plot the short-run industry supply curve when there are 40 firms Type here to search With 20 firms in this market, the short-run equilibrium price of titanium would be $2.50 price, firms in this industry wouldearn z r.pound. At that will be 30 firms operating in the ti

Answer 1

In perfect competition, there are no entry or exit barriers and all the firms are identical in product and cost curves.
If the price is below the Average Total Cost curve then it means the firm is incurring a loss and it is not a sustainable situation and the firm might exit.

In perfect competition, the firms can earn positive economic profit only in the short run which means the price could be more than $4 and it could be $6 or $9. This will attract more firms in the market and supply in the market which will bring down the price.

However, perfect competition scenario ensures that there will zero economic profit in the long run which means the price will be equal to ATC or $4 in the long run.
There is no restriction on how many firms can enter or exit from the market so it can have 40 firms in the long run.