Assume that the amusement park industry is perfectly competitive. Suppose it is in long run equilibruym...
Assume that the amusement park industry is perfectly competitive. Suppose it is in long run equilibruym when the price of roller coaster fuel increases, raising the cost of operating roller coasters.
1. Draw 2 graphs (1 overall market and 1 firm specific) demonstrating what you expect to happen to the number of amusement parks in business.
2. Provide a brief explanation of what is occuring in the graphs.
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Assume that the amusement park industry is perfectly
competitive. Suppose it is in long run equilibruym...
1. Suppose that a perfectly competitive industry is at a long-run equilibrium (each individual firm producing...
1. Suppose that a perfectly competitive industry is at a long-run equilibrium (each individual firm producing a quantity corresponding with minimum average cost). This implies that the following condition holds P = MC = AC. Assume that all firms have identical cost structures and the cost of inputs used in production (such as labor, raw material, intermediate goods, etc.) stays the same as the industry expands or contracts (i.e. constant-cost industry). a. Show with graphs and explain with words what...
Suppose that a perfectly competitive industry is in long-run equilibrium. The price of a complement good...
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Assume that the perfectly competitive market for ethanol is in long-run equilibrium. Now suppose that the...
Assume that the perfectly competitive market for ethanol is in long-run equilibrium. Now suppose that the price of gasoline, a substitute for ethanol, increases. Explain what will happen in the market for ethanol. 1) Describe how this change will affect short-run economic profits. 2) What will happen to the number of firms producing ethanol in the long run? 3) How will price and output in this industry adjust in the long run?
2) Suppose we observe a perfectly competitive industry in long-run equilibrium when there is a permanent...
2) Suppose we observe a perfectly competitive industry in long-run equilibrium when there is a permanent decrease in demand for the industry's product. a) Using graphs explain how the industry adiusts to a new long-run equilibriumm. b) What happens to price, quantity, firm profits and the number of firms during the adiustment process?
1. (5 points) Assume that a perfectly competitive industry is in long run equilibrium. Then an...
1. (5 points) Assume that a perfectly competitive industry is in long run equilibrium. Then an improvement in technology reduces the average total cost and marginal cost of all firnis. In the long run what happens to price, economic profits, and number of firms in the industry? Please give an explanation.
Consider the following statements. I. In the long run, every firm in a perfectly competitive industry...
Consider the following statements. I. In the long run, every firm in a perfectly competitive industry will make an economic profit of zero. II. In the short run, every firm in a perfectly competitive industry will make the same economic profit. III. In the long run, firms in perfectly competitive industries must be productively efficient. I and II are true; III is false. I and III are true; II is false. I and III are false; II is true. All...
Long Run Equilibrium 4. Suppose each firm in a perfectly competitive industry has the same long...
Long Run Equilibrium 4. Suppose each firm in a perfectly competitive industry has the same long run total cost function T C(q) = 16+q^2 . The market demand curve is QD = 100−P. (a) What 3 equations define a Long Run Perfectly Competitive Equilibrium? (b) How much quantity q ∗ does each firm produce in Long Run Perfectly Competitive Equilibrium? (c) What is the market price P ∗ in this equilibrium? (d) Find the market quantity Q∗ . ( e)...
Suppose that the price of corn, a crop produced in a perfectly (or purely) competitive industry,...
Suppose that the price of corn, a crop produced in a perfectly (or purely) competitive industry, increased 208% last year as demand for corn based ethanol fuel increased. What do you expect to happen in the long run for the corn industry given this recent success? The price per bushel of corn will continue to increase, yielding higher profits. Thus more firms will enter the market indefinitely. Profits will become negative due to over farming, which will result in the...
assume that the perfectly competitive market for ethanol is in long-run equilibrium. now suppose that the...
assume that the perfectly competitive market for ethanol is in long-run equilibrium. now suppose that the price of gasoline, a substitute for ethanol, increase. explain what will happen in the market for ethanol.(1) describe how this change will affect short-run economic profits.(2) what will happen to the number of firms producing ethanol in the long-run? (3)how will price and output in this industry adjust in the long run?
29. Assume a perfectly competitive, constant-cost industry is initially in long-run equilibrium. What is the long-run...
29. Assume a perfectly competitive, constant-cost industry is initially in long-run equilibrium. What is the long-run effect of an A. B. increase in demand? P decreases and Q increases. P decreases and Q decreases. C. D. Q decreases but P remains unchanged. Pincreases and Q decreases. E. F. P increases and Q increases. Q increases but P remains unchanged. a perfecetly competitive, decreasing-cost industry is in long-run equilibrium. What is the long-run effect of a decrease in demand? A. P...
1. Suppose that a perfectly competitive industry is at a long-run equilibrium (each individual firm producing a quantity corresponding with minimum average cost). This implies that the following condition holds P = MC = AC. Assume that all firms have identical cost structures and the cost of inputs used in production (such as labor, raw material, intermediate goods, etc.) stays the same as the industry expands or contracts (i.e. constant-cost industry). a. Show with graphs and explain with words what...
2) Suppose we observe a perfectly competitive industry in long-run equilibrium when there is a permanent decrease in demand for the industry's product. a) Using graphs explain how the industry adiusts to a new long-run equilibriumm. b) What happens to price, quantity, firm profits and the number of firms during the adiustment process?
1. (5 points) Assume that a perfectly competitive industry is in long run equilibrium. Then an improvement in technology reduces the average total cost and marginal cost of all firnis. In the long run what happens to price, economic profits, and number of firms in the industry? Please give an explanation.
Suppose that the price of corn, a crop produced in a perfectly (or purely) competitive industry, increased 208% last year as demand for corn based ethanol fuel increased. What do you expect to happen in the long run for the corn industry given this recent success? The price per bushel of corn will continue to increase, yielding higher profits. Thus more firms will enter the market indefinitely. Profits will become negative due to over farming, which will result in the...
29. Assume a perfectly competitive, constant-cost industry is initially in long-run equilibrium. What is the long-run effect of an A. B. increase in demand? P decreases and Q increases. P decreases and Q decreases. C. D. Q decreases but P remains unchanged. Pincreases and Q decreases. E. F. P increases and Q increases. Q increases but P remains unchanged. a perfecetly competitive, decreasing-cost industry is in long-run equilibrium. What is the long-run effect of a decrease in demand? A. P...
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