7. Short-run supply and long-run equilibrium Consider the competitive market for ruthenium, 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. mework (Ch 14) The following graph plots the market demand curve for ruthenium. Use the orange points (square symbol) to plot the incrar short-run inductry supply curve when there are to firms in the manket. (wint: You can disregard the portion of the supply curve that corresponds to pnces where there of no outout since this is the industry sugaly curve. Next use the purple pounts (coamond symbol) to plot the shortcrun industry supply curve when there are 20 firms, finasy, use the green points (traingle svmbel) to piot the shorturun indutor supply curve when thene are 30 firms. plot the short-run industry supply curve when there are 30 firms. If there were 20 firms in this market, the short-run equilibrium price of ruthenium would be per poundist that price, firms in this industry would Therefore, in the long run, firms would the ruthenium market. Because you know that cornpetitive firms earn economic profit in the long run, you know the long-run equillbrium price must be per pound. From the graph, you can see that this means there will be firms operating in the ruthenium 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 eams negative accounting profit. True False 7. Short-run supply and long-run equilibrium Consider the competitive market for ruthenium, 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. mework (Ch 14) The following graph plots the market demand curve for ruthenium. Use the orange points (square symbol) to plot the incrar short-run inductry supply curve when there are to firms in the manket. (wint: You can disregard the portion of the supply curve that corresponds to pnces where there of no outout since this is the industry sugaly curve. Next use the purple pounts (coamond symbol) to plot the shortcrun industry supply curve when there are 20 firms, finasy, use the green points (traingle svmbel) to piot the shorturun indutor supply curve when thene are 30 firms. plot the short-run industry supply curve when there are 30 firms. If there were 20 firms in this market, the short-run equilibrium price of ruthenium would be per poundist that price, firms in this industry would Therefore, in the long run, firms would the ruthenium market. Because you know that cornpetitive firms earn economic profit in the long run, you know the long-run equillbrium price must be per pound. From the graph, you can see that this means there will be firms operating in the ruthenium 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 eams negative accounting profit. True False
