100 H Prot or Loss 90 80 70 60 50 40 30 PRICE AND COST (Dollars per watch) 20 10 D 1 U 20 30 40 50 50 70 30 90 1 DO QUANTITY or OUTPUT (Watches) In the short run, at a market price of $80 per watch, this firm will choose to produce 7 watches per day. On the previous graph, use the blue rectangle (circle symbols) to shade the area representing the rm '5 prot or loss if the market price is $80 and the rm chooses to produce the quantity you already selected. Note: In the following question, you should enter a positive number in the numeric entry eld. The area of this rectangle indicates that the rm's v would he $ per day. Attempts |:I:I:| Average 1 4 7. Short-run supply and long-run equilibrium Consider the perfectly competitive market for titanium. Assume that, regardless of how many rms are in the industry, every firm in the industry is identical and faces the marginal cost (MC ), average total oost (ATC ), and average variable cost (AVC ) curves shown on the following graph. ('3) 1D!) COSTS (Dollars par pound) S 1 a MC AVG 0510152053035404550 QUANTITY OF OUTPUT {'l'l'lousands n1 pounds] The following diagram shows the market demand for titanium. Use the orange points (square symbol) to plot the short-run industry supply curve when there are 20 rms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where 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 rms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 40 firms. Use the orange points (square symbol) to plot the short-run industry supply curve when there are 20 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where 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 green points (triangle symbol) to plot the short-run industry supply curve when there are 40 firms. 100 90 Supply (20 firms) 8 Supply (30 firms) PRICE (Dollars per pound) Supply (40 firms) Demand 20 10 o 0 123 250 373 500 623 750 873 1000 1123 1250 QUANTITY OF OUTPUT (Thousands of pounds) If there were 30 firms in this market, the short-run equilibrium price of titanium would be $ per pound. At that price, firms in this industry would . Therefore, in the long run, firms would the titanium market. Because you know that perfectly competitive firms earn economic profit in the long run, you know the long-run equilibrium price must be $ per pound. From the graph, you can see that this means there will be _ firms operating in the titanium industry in long-run equilibrium. True or False: Each of the firms operating in this industry in the long run earns positive accounting profit. True False