Question

7. Short-run supply and long-run equilibrium Consider the competitive market for copper. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. COSTS (Dollars per pound) MC D AVC 0 + 0 + 10 + + + + + + + 20 30 40 50 60 70 80 QUANTITY (Thousands of pounds) + 90 100 The following diagram shows the market demand for copper.

Answer 1

P	QS-1 FIRM	QS-10 FIRMS	QS-15 FIRMS	QS-20 FIRMS
10	0	0	0	0
15	30000	300000	450000	600000
30	40000	400000	600000	800000
40	45000	450000	675000	900000
70	55000	550000	825000	1100000
90	60000	600000	900000	1200000

Supply (10 firms) Supply (15 firms) PRICE (Dollars per pound) Supply (20 firms) Demand H 0 125 1125 1250 250 375 500 625 750 875 1000 QUANTITY (Thousands of pounds)

Blanks-

1) 40

2) earn positive profits

3) enter

4) zero

5) 30

6) 15

The statement is False