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Widgets are supplied by a competitive constant-cost industry. On Monday, the industry is in both short-run and long-run equilibrium. On Tuesday, the demand for widgets increases and the industry moves to a new short-run equilibrium. On Wednesday, the industry reaches its new long-run equilibrium.
a) On which day or days is the price of widgets highest? On which day or days is it lowest?
b) On which day or days is the industry-wide quantity of widgets highest? On which day or days is it lowest?
c) On which day or days does Bobo the Widget Man produce the most widgets? On which day or days does he produce the least?
Use graphs to justify your answers.
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