Demonstrate the shift that will occur in market in long run
Course:- Business Economics
Reference No.:- EM13891956

Assignment Help
Assignment Help >> Business Economics

You are going to display what happens in the long run in perfectly competitive markets when firms are operating at a loss.

a) Draw a graph of a firm's MC, ATC, AVC, and MR curves that is operating at a loss, yet above its short-run shut-down price. Make sure that each curve has all the proper identifying characteristics (where the minimum is, increasing or decreasing, etc.)

b) On a separate graph, draw the supply and demand curve for the market in which this firm operates. Identify the equilibrium price.

c) Demonstrate the shift that will occur in the market in the long run if all firms in this market are operating at a loss. Identify the new equilibrium price after the shift.

d) On the graph from part a, draw the MR curve in the long run based on the price adjustment.

Put your comment

Ask Question & Get Answers from Experts
Browse some more (Business Economics) Materials
Illustrate what is the product maximizing level of output for this producer. Will the producer make a positive profit at this level of output.
Suppose you have been tasked with regulating a single monopoly firm that sells 50-pound bags of concrete. The firm has fixed costs of $10 million per year and a variable cost
A free-market republican argues against the Pigouvian tax by pointing out that the conditions necessary for the Coase Theorem to produce an efficient equilibrium are present i
A firm production function is given by q = f(k,l) = k.l^1/2. Consider a short-run situation where the level of capital is fixed at k1. This firm’s profit function is of the fo
Describe the best possible distribution channel for that product or service and why that particular channel would be better than any alternatives. Discuss the challenges yo
A manager of a local monopoly estimates elasticity of demand for its product is constant and equal to -2 Marginal cost is constant at 15 per unit. A. express marginal revenue
As Vice President of sales for a rapidly growing company, you are grappling with the question of expanding the size of your direct sales force ( from its current level of 60 n
The mall of the future will most likely be less about purchasing products than about exploring them in a physical setting. This means that retail environments will have to bec