Suppose that the market for blenders is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. 100 8 8 Profit or Loss 80 ATC 70 60 50 PRICE (Dollars per blender) 40 30 20 AVC MC 5 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of blenders) In the short run, at a market price of $35 per blender, this firm will choose to produce blenders per day. On the previous graph, use the blue rectangle (circle symbols) to shade the area representing the firm's profit or loss if the market price is $35 and the firm chooses to produce the quantity you already selected. Note: In the following question, you should enter a positive number in the numeric entry field. The area of this rectangle indicates that the firm's would be $ per day.Suppose that the market for black sweaters is a competitive market. The following graph shows the daily cost curves of a rm operating in this m a rket. 3\" AK: 15 PRICE (Dollars per sweater) 10 AUG 0 2 4 e- a 10 12 14 16 13 20 QUANTITY {Thousands of sweaters] For each price in the following table, calculate the firm's optimal quantity of units to produce, and determine the profit or loss if it produces at that quantity, using the data from the previous graph to identify its total variable cost. Assume that if the firm is indifferent between producing and shutting down, it will produce. (Hint: You can select the purple points [diamond symbols] on the previous graph to see precise information on average variable cost.) Price Quantity Total Revenue Fixed Cost Variable Cost Profit (Dollars per sweater) (Sweaters) (Dollars) ( Dollars) (Dollars) (Dollars) 12.50 135,000 27.50 135,000 45.00 135,000 If the firm shuts down, it must incur its fixed costs (FC) in the short run. In this case, the firm's fixed cost is $135,000 per day. In other words, if it shuts down, the firm would suffer losses of $135,000 per day until its fixed costs end (such as the expiration of a building lease). This firm's shutdown price-that is, the price below which it is optimal for the firm to shut down-is per sweater.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 70 80 ATC 50 COSTS (Dollars) 40 30 AVC MC O 0 10 20 30 40 50 60 70 80 90 100 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? 15 20 25 55 70 85 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 -0- 90 Firm's Short-Run Supply 80 8 8 PRICE (Dollars per jacket) 10 0 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of jackets)Suppose there are 8 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 90 Industry's Short-Run Supply 80 Demand 70 Equilibrium PRICE (Dollars per jacket) 40 30 20 80 160 240 320 400 480 560 640 0 720 800 QUANTITY (Thousands of jackets) At the current short-run market price, firms will in the short run. In the long run,Consider the competitive market for titanium. Assume that, regardless of how many,f rms are in the industry, everyr rm in the industry is identical and faces the marginal cost {MC}, average total cost {ATE}, and average variable cost {nvc} curves shown on the following graph. 100 ATC COSTS (Dollars per kilogram) 10 AVG dsrorszozsaoasquso QUANTITY (Thousands of kilograms] The following diagram shows the market demand for titanium. On the graph below, use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 20 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 30 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 40 firms. 100 -0 Supply (20 firms) 80 70 60 Supply (30 firms) 50 4 PRICE (Dollars per kilogram) 40 Supply (40 firms) Demand 30 20 10 0 0 125 250 375 500 625 750 875 1000 1125 1250 QUANTITY (Thousands of kilograms)If there were 30 rms in this market, the shortrun equilibrium price of titanium would be per kilogram. At that price, rms in this industry would 7 . Therefore, in the long run, rms would V the titanium market. Because you know that competitive rms earn 7 economic prot in the long run, you know the longrun equilibrium price must be per kilogram. From the graph, you can see that this means there will be 7 rms operating in the titanium industry in longrun equilibrium. True or False: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns negative aooounling prot. O True 0 False Suppose that the shrimp industry is in long-run equilibrium at a price of $5 per kilogram of shrimp and a quantity of 100 million kilograms per year. Suppose the Public Health Agency of Canada (PHAC) issues a report saying that eating shrimp is bad for your health. The PHAC's report will cause consumers to demand _ shrimp at every price. In the short run, firms will respond by On the graph below, shift the demand curve, the supply curve, or both on the following diagram to illustrate these short-run effects of the PHAC's report. (?) 10 O Supply Demand Supply PRICE (Dollars per kilogram) Demand N 0 20 40 60 80 100 120 140 160 180 200 QUANTITY (Millions of kilograms) In the long run, some firms will respond by untilOn the graph below, shift the demand curve, the supply curve, or both on the following diagram to illustrate both the short-run effects of the PHAC's report and the new long-run equilibrium after firms and consumers finish adjusting to the news. 10 O Supply Demand CO O Supply PRICE (Dollars per kilogram) Demand 0 0 20 40 60 80 100 120 140 160 180 200 QUANTITY (Millions of kilograms) The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is in the long run