Question
(a) Draw correctly labeled side-by-side graphs for a firm and for the wheat market in long-run equilibrium. (a) (i) Label the demand curve D1, supply
(a) Draw correctly labeled side-by-side graphs for a firm and for the wheat market in long-run equilibrium. (a) (i) Label the demand curve D1, supply curve S1, the market equilibrium price PM1 and the equilibrium quantity QM1. (a) (ii) Label the firm's marginal cost MC1, its average total cost ATC1, its demand curve DF1, and its profit-maximizing price and quantity PF1 and QF1. (b) Now suppose that increased gluten sensitivity causes a decrease in the demand for wheat. As needed, draw and label new curves. Also, show the following on your graphs from part (a): (b) (i) The new short-run market equilibrium price and quantity, labeled PM2 and QM2. (b) (ii) The new short-run profit-maximizing price and quantity for the representative firm, labeled PF2 and QF2.
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