CENGAGE | MINDTAP Homework (Ch 14) 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. 80 72 64 56 48 ATC COSTS (Dollars per pound) 40 32 24 AVC 16 OBMODO hp\fHomework (Ch 14) The following graph plots the market demand curve for rhenium. Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 10 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve. ) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 20 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 30 firms. 72 Supply (10 firms) 64 56 48 Demand Supply (20 firms) PRICE (Dollars per pound) 40 A 32 Supply (30 firms) 24 BMODO hpPRICE (Dollars per pound) 120 'tt 240 360 480 600 720 840 960 1080 1200 QUANTITY (Thousands of pounds) Supply (10 firms) %= Supply (20 firms) A Supply (30 firms) CENGAGE | MINDTAP Homework (Ch 14) 0 0 120 240 360 480 600 720 840 960 1080 1200 QUANTITY (Thousands of pounds) If there were 20 firms in this market, the short-run equilibrium price of rhenium would be $ per pound. At that price, firms in this industry would . Therefore, in the long run, firms would the rhenium market. =I Becau earn zero profit titive firms earn economic profit in the long run, you know the long-run equilibrium price must be $ operate at a loss graph, you can see that this means there will be _ firms operating in the rhenium industry in long-run equilibrium. earn a positive profit True of it costs are positive, each of the firms operating in this industry in the long run earns negative accounting profit. shut down O False Grade It Now Save & Continue ? Continue without saving OFMODO