Log in
Economics
8
answers
0
watching
192
views
25 Oct 2018

22. What is the short-run effect on a perfectly competitive constant-cost industry of a technological change that causes a fall of $1 per unit in the marginal, average and average variable costs of all firms (presuming normally-shaped cost curves)? (A) fall in price by less than $1, decrease in firm output and industry output, and no change in profit (B) fall in price by less than $1, decrease in industry output, but no change in firm output or profit (C) fall in price by less than $1 and increase in firm output, industry output and profit (D) fall in price by less than $1, increase in firm and industry output and no change in profit (E) fall in price by more than $1 and decrease in firm output, industry output and profit (F) fall in price by more than $1, decrease in firm and industry output and no change in profit (G) fall in price by $1, decrease in firm output, but no change in industry output or profit (H) fall in price by $1, no change in firm output or profit and increase in industry output. (1) fall in price by $1 and decrease in firm output, industry output, and profit (J) none of the above

word_media_image1.png
Watch
8
answers
0
watching
192
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share
Already have an account? Log in
Share
Already have an account? Log in
Share
Already have an account? Log in
Share
Already have an account? Log in
Share
Already have an account? Log in
Share
Already have an account? Log in
Share
Hubert Koch
Hubert KochLv2
26 Oct 2018
Already have an account? Log in
Share

Related textbook solutions

Principles of Economics
2nd Edition, 2017
Openstax
ISBN: 9781947172364
Principles of Macroeconomics
2 Edition,
Openstax
ISBN: 9781947172388
Principles of Microeconomics
2 Edition,
Openstax
ISBN: 9781947172340

Related questions

World palm oil consumption has been in decline over the past several years as consumers have become more sensitive to the destruction of the rainforest to harvest palm oil. Assume that the palm oil industry is perfectly competitive and consists of firms with U-shaped long-run average cost curves. Suppose the industry was in long-run equilibrium before the decline began. Now consider a permanent downward shift in demand for palm oil. Assume this is a constant cost industry. Compared to the original long-run equilibrium, will the market equilibrium price and output per firm rise, fall, or stay the same in the short run? Compared to the original long-run equilibrium, will the market equilibrium price and output per firm rise, fall, or return to the original equilibrium level in the long run? Explain the dynamic adjustment process from the original long-run equilibrium to the new long-run equilibrium. No graph is required. Circle your final answers for price and quantity below.

Short-Run CIRCLE YOUR ANSWER FOR EACH

Market Equilibrium Price will Rise Fall Remain constant

Output per Firm will Rise Fall Remain constant

Long-Run

Market Equilibrium Price will Rise Fall Return to original level

Output per Firm will Rise Fall Return to original level

1.) The minimum feasible long-run average cost for firms in a perfectly competitive industry is $58 per unit. IF every firm in the industry currently is producing an output consistent with a long-run equilibrium, calculate the marginal cost incurred by each firm and the market price.

Marginal cost is $___ and market price is $___ .

How I calculate this?

2.) A perfectly competitive increasing cost industry is in long-run equilibrium. Due to a change in tastes and preferences, there is a decrease in demand. Which of the following best describes the effect on the industry?

The price will

A.) decrease, firms will produce more, profits will decrease, and more firms will enter until profit returns to zero.

B.) decrease, firms will produce less, profits will increase, and more firms will enter until profit returns to zero.

C.) decrease, firms will produce less, profits will be below zero, and firms will exit until profit returns to zero.

D.) increase, firms will produce more, profits will increase, and more firms will enter until profit returns to zero.

1. World palm oil consumption has been in decline over the past several years as consumers have become more sensitive to the destruction of the rainforest to harvest palm oil. Assume that the palm oil industry is perfectly competitive and consists of firms with U-shaped long-run average cost curves. Suppose the industry was in long-run equilibrium before the decline began. Now consider a permanent downward shift in demand for palm oil. Assume this is a constant cost industry. Compared to the original long-run equilibrium, will the market equilibrium price and output per firm rise, fall, or stay the same in the short run? Compared to the original long-run equilibrium, will the market equilibrium price and output per firm rise, fall, or return to the original equilibrium level in the long run? Explain the dynamic adjustment process from the original long-run equilibrium to the new long-run equilibrium. No graph is required. Circle your final answers for price and quantity below. (2 points each for each correct answer circled below and remaining 7 points for explaining the adjustment process.)

Short-Run CIRCLE YOUR ANSWER FOR EACH

Market Equilibrium Price will Rise Fall Remain constant

Output per Firm will Rise Fall Remain constant

Long-Run

Market Equilibrium Price will Rise Fall Return to original level

Output per Firm will Rise Fall Return to original level

Ā 

Weekly leaderboard

Home
Homework Help 3,900,000
Economics 400,000
Start filling in the gaps now
Log in