6. Short-run supply and long run equilibrium Condider the competitive market for copper 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, 72 88 COSTS Dollars per pound 2 10 AVC MC O 3 21 NO 6 21 QUANTITY (Thousands of pounds) The following diagram shows the market demand for copper. Use the orange points (square symbol) to plot the initial short run industry supply curve when there are 20 firms in the market. (Hint: You can disregard the portion of the ruly curve that corresponds to prices where there is no output so this is the industry supply curve) Next use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 40 forms. Finally, use the green points (triangle symbol plot the short-run industry supply curs when there are 60 ms. 72 Supply 20 04 Demand PRICE as per pound * 8 8 8 Supriy (40) A Supy (0) 27 12 11 QUANTITY (Thousands of pound) The following diagram shows the market demand for cooper Use the orange points (square symbol to plot the incial short run industry spy curve when there are 20 me in the market. (Hint: You can disregard the portion of the supply curve that corresponds to Viet where there is no output since this is the industry poly curve) art use the purple points (diamond symbol) to blot the short-run industry supply curve when there are 0 firma, Flyse the green pores (trangle molto plot the short run industry supply curve when there are som . 04 Supply (20) Demand Supply (40 fm) 8 8 PRICE (Otars per pound 4 Dopply (60) 24 0 120 240 040 000 2000 200 QUANTITY (Thods of pounds) If there were 20 firms in this market, the short run equilibrium price of copper would be 3 would . Therefore, in the long run, firms would per pound. At that price, firms in this industry the copper market Because you know that competitive firms cam economic profit in the long run, you know the long run equilibrium pre must be 5 per pound. From the graph, you can see that this means there will be firms operating in the copper Industry in long run equilibrium True or False: Assuming Implicit costs are positive, each of the firms operating in this industry in the long run carne negative accounting profit. True False Grade It Now Save & Continue Continue without saving