At the current short-run market price, firms will (produce, shut down)in the short run. In the long run, (firms will neither enter nor exit, some firms will enter, some firms will exit.)
Homework (Ch 14) 6. Deriving the short-run supply curve Consider the competitive market for sports jackets. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves for a typical firm in the industry. 100 90 80 70 COSTS (Dollars) 60 50 ATC 40 30 20 AVC 10 MC- 5 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of jackets)For each price in the following table, use the graph to determine the number of jackets this firm would produce in order to maximize its profit. Assume that when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero jackets and the profit-maximizing quantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will make a profit, suffer a loss, or break even at each price. Price Quantity (Dollars per jacket) (Jackets) Produce or Shut Down? Profit or Loss? 10 20 32 40 50 60 On the following graph, use the orange points (square symbol) to plot points along the portion of the firm's short-run supply curve that corresponds to prices where there is positive output. (Note: You are given more points to plot than you need. ) 100 Firm's Short-Run Supply 90 80Homework (Ch 14) On the following graph, use the orange points (square symbol) to plot points along the portion of the firm's short-run supply curve that corresponds to prices where there is positive output. (Note: You are given more points to plot than you need.) 100 90 80 Firm's Short-Run Supply PRICE (Dollars per jacket) 70 60 50 40 30 20 10 5 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of jackets) Suppose there are 9 firms in this industry, each of which has the cost curves previously shown.On the following graph, use the orange points (square symbol) to plot points along the portion of the industry's short-run supply curve that corresponds to prices where there is positive output. (Note: You are given more points to plot than you need.) Then, place the black point (plus symbol) on the graph to indicate the short-run equilibrium price and quantity in this market. Note: Dashed drop lines will automatically extend to both axes. 100 Demand -O 90 Industry's Short-Run Supply 80 PRICE (Dollars per jacket) 70 Equilibrium 60 50 40 30 20 10 O 45 90 135 180 225 270 315 360 405 450 QUANTITY (Thousands of jackets)mework (Ch 14) Q Search 100 Demand 90 80 Industry's Short-Run Supply PRICE (Dollars per jacket) 70 60 Equilibrium 50 40 30 20 10 45 90 135 180 225 270 315 360 405 450 QUANTITY (Thousands of jackets) At the current short-run market price, firms will in the short run. In the long run, Grade It Now Save & Continue Continue without saving
