If there were 20 firms in this market, the short-run equilibrium price of rhodium would be per pound. At that price, firms in this industry would . Therefore, in the long run, firms would the rhodium market. Because you know that competitive firms earn economic profit in the long run, you know the long-run equilibrium price must be per pound. From the graph, you can see that this means there will be firms operating in the rhodium industry in long-run equilibrium. True or False: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns negative accounting profit.True False 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 candisregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use thepurple points (diamond symbol) to plot the short-run industry supply curve when there are 20 firms. Finally, use the green points (triangle symbol) toplot the short-run industry supply curve when there are 30 firms.PRICE (Dollars per pound)807264564840322416800Demand120 240 360 480 600 720 840 960 1080 1200QUANTITY (Thousands of pounds)-0-Supply (10 firms)Supply (20 firms)Supply (30 firms)(?) Consider the competitive market for rhodium. Assume that no matter how many firms operate in the industry, every firm is identical and faces thesame marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves plotted in the following graph.COSTS (Dollars per pound)807264168004MCATCAVC☐☐8 12 16 20 24 28QUANTITY (Thousands of pounds)32☐36☐40?

In economics, competition is a situation where different economic firms are in contention to obtain…

Answered: If there were 20 firms in this market,…

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter10: The Firm And The Industry Under Perfect Competition

Section: Chapter Questions

Problem 4TY

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Question

If there were 20 firms in this market, the short-run equilibrium price of rhodium would be

per pound. At that price, firms in this industry would . Therefore, in the long run, firms would the rhodium market.

Because you know that competitive firms earn economic profit in the long run, you know the long-run equilibrium price must be

per pound. From the graph, you can see that this means there will be firms operating in the rhodium industry in long-run equilibrium.

True or False: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns negative accounting profit.

True

False

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.
PRICE (Dollars per pound)
80
72
64
56
48
40
32
24
16
8
0
0
Demand
120 240 360 480 600 720 840 960 1080 1200
QUANTITY (Thousands of pounds)
-0-
Supply (10 firms)
Supply (20 firms)
Supply (30 firms)
(?)

Consider the competitive market for rhodium. 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.
COSTS (Dollars per pound)
80
72
64
16
8
0
0
4
MC
ATC
AVC
☐
☐
8 12 16 20 24 28
QUANTITY (Thousands of pounds)
32
☐
36
☐
40
?

Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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