7. Short-run supply and long-run equilibrium

Consider the competitive market for rhenium. Assume that no matter how many firms operate in the industry, every firm is identical and faces the same marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves plotted in the following graph.

60, 90 100 80 70 80 COSTS (Dollars per pound) 50 40 ATC 30 20 MC O AVC 0 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of pounds)100 0 90 Supply (10 firms) 80 70 Supply (15 firms) 60 PRICE (Dollars per pound) 50 A 40 Supply (20 firms) Demand 30 20 10 0 125 250 375 500 625 750 875 1000 1125 1250 QUANTITY (Thousands of pounds)