This is my third time posting this question so please look at it carefully. The

Question

This is my third time posting this question so please look at it carefully.

The first graph is apart of the question, any other answer you see needs to be checked INCLUDING the table.

1. Please check the table.

2. Please provide exact points for me to the graph for the next graph

3. For third and final graph please provide one point on the graph for the equilibrium and points for the orange

4. Two fill-ins

A. Produce or shut down

B. Some firms will enter, some firms will exit or firms will neither enter nor exit

I will check right after you post an answer so please check comments in case there is an issue

Consider the perfectly competitive market for halogen lamps. The following graph shows the marginal cost (MC), average cost (AC), and average variable cost (AVC) curves for a typical firm in the industry. 80 72 64 56 48 40 32 24 16 AVC 0 816 24 32 40 48 56 64 72 80 QUANTITY (Thousands of lamps)

Explanation / Answer

Answer

For A Perfect Competitive Market, A firm will incur Loss If P = MC < AC and a firm shut in a short Run If P = MC < AVC.

Hence We have a following Table.

Short Run Supply Curve is same as MC curve drawn in figure 1 but initial point will be (36, 12) and there is no supply curve below price = 12. Draw Marginal Cost Curve but start it from (36,12)

For Market Supply Curve with 9 firms Draw Curve with Same Shape as MC drawn in 1st graph but initial Point will be (324,12) Note x coordinate is in 1000 so initial Quantity = 324000 and Initial Price = 12. Another Points will be (432,36), (504,60). Note that, For Market Supply curve you have to shift Individual Supply Curve 9 times to the right.(See coordinates you will understand).

Now Equilibrium Point will be (46,450){Approx}.

In Long Run a perfect competitive firms make Zero, If Profit > 0 New firms will enter. We can see from the first graph that P > AC when P = 46. Hence It means Firm will earning Profit and hence In Short Run they will Produce(P = MC = 46 > AVC) but in Long Run Some Firms will Enter (Because They are earning Profits)

Price Quantity Produce Or Shut Down Profit or Loss 4 0 Shut Down Loss 8 0 Shut Down Loss 12 Either 0 or 36000 Either Shut Down or Produce Loss 36 48000 Produce Breakeven 48 52000 Produce Profit 60 56000 Produce Profit

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