COURSE: Microeconomics

PART 1

Short-run supply and long-run equilibrium:

Consider the perfectly competitive market for copper. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MCMC), average total cost (ATCATC), and average variable cost (AVCAVC) curves shown on the following graph.

\f460 Monopolistically Competitive Outcome 400 360 Profit or Loss 300 260 PRICE (Dollars per bike) ATC 200 150 100 MR Demand 100 150 200 250 300 360 400 450 QUANTITY (Bikes)100 Monopolistic Competition Outcome 70 Perfect Competition Outcome PRICE, COSTS, AND REVENUE ( Dollars per jacket) LRATC 40 30 D 10 MR 10 130 40 50 60 70 90 100 QUANTITY (Thousands of jackets)Monopoly 4.5 Monopoly Outcome 4.0 3.5 310 2.5 PRICE ( Dollars per hot dog) MC 1.5 1.0 0.5 D 100 150 200 250 300 350 400 450 500 QUANTITY (Hot dogs)\fMarket A Market B 20 20 18 18 16 16 14 12 12 10 10 PRICE (Dollars per ticket) PRICE (Dollars per ticket) m m MR. D MR. 0 12 15 18 21 24 27 30 0 12 15 18 21 24 27 30 QUANTITY (Admission tickets) QUANTITY (Admission tickets)72 Supply (20 firms) Demand Supply (40 firms) A 40 PRICE (Dollars per kilogram) 32 Supply (60 firms) 118 240 358 480 508 720 838 060 1078 1200 QUANTITY (Thousands of kilograms)\fRevenue Lost 200 175 Revenue Gained 150 125 PRICE (Thousands of dollars per fire engine) Demand 100 75 10 1 3 4 7 QUANTITY (Fire engines)