Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
The firms in a perfectly competitive industry had been earning zero economic profits. However, the firms have recently experienced a large decrease in the cost of energy that enables them to substantially reduce the marginal cost and average total cost of producing each unit of output. The market demand for the product is pretty elastic. On the other hand, short-run efforts to increase production run into severely diminishing returns with respect to the employment of additional variable inputs.
Draw two average total cost curves (ATC) for a typical firm. One curve should represent ATC before the fall in the cost of energy. The other curve should represent ATC after the fall in the cost of energy. Assume that the fall in the cost of energy does not affect the minimum efficient scale (MES) of production. Draw short-run marginal cost curves on the same diagram to show both the fall in the cost of energy and the severely diminishing returns to the employment of additional variable inputs.
Next to the diagram for a typical firm, draw a supply-demand diagram for the industry. The slope of the demand curve should reflect the elasticity of demand for the product. The short-run supply curve should reflect the presence of severely diminishing returns with respect to the employment of additional variable inputs. The original equilibrium price in this diagram should line up with the minimum point of the original ATC curve for a typical firm.
Properly shift demand or supply to reflect the fall in the cost of energy. Note the change in the market equilibrium. How does the magnitude of the change in the market price compare to the magnitude of the shift in ATC? Explain. Do firms now experience short-run economic profits? In the long-run, can entry of new firms be expected in this industry? If we have a decreasing-cost industry, show in your diagrams where the cost curves, the market price, and the equilibrium market quantity end up. Fully explain what has happened. Does the equilibrium quantity end up changing much in comparison to the magnitude of the overall change in price? Why or why not?
Examine the market for tickets for popular sporting events through the supply and demand model. Consider the following questions: How often are you able to buy a popular event ticket (for example, the Super Bowl) at face value? How are the tickets or..
A business cycle is the period of time in which ?
Immediately after the second payment, the terms of the agreement are changed to allow the balance due to be paid off in a single payment the next year. What is the final single payment? (final answer should be $7778).
Describe the effect of increase from 1998-1999. How would the increase in demand affect the price? How would the price effect depend upon the price elasticity of supply? Please describe how. (Explain the illustration instead of actually drawing it)
The Mining Group Gold process is a team process and meeting management process whose sole purpose is to leverage the combined wisdom, experience, and ideas of everyone on the team in order to cash in on this wisdom to improve the overall meeti..
In the short run, a firm charges $4 per unit and sells 620 units of output. Its short run variable costs (SVC) are $2500; its short run fixed costs (SFC) are $3000; and its short run total costs are therefore $5500. From this information, we ca..
1. Bill Gates argue that world poverty as we know it can be ended by 2020. What myths has the work of his foundation debunked and can what he has learned work here at home?
Historically, shifts towards a more expansionary monetary policy have often been associated with increases in real output. Is this surprising? why or why not?
Consider a typical village money lender in a loan market where competition among money lenders drives the rural rate of interest to a point where each lender on average earns zero expected profits (over and above the opportunity cost of funds to l..
Workers who demand a wage that is equal to the equilibrium wage: Workers with a particular skill are represented by: Workers who demand a wage that is equal to the equilibrium wage:
Normal 0 false false false EN-US X-NONE X-NONE The consumption function is ..
Explain the three basic economic questions along with an analysis of the centralized command and control system, the price system, and the mixed economic system
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd