Question
In: Economics
Suppose the market for fresh pork is a competitive market. Initially, it is operating at its long-run competitive equilibrium at a market price of $50
Suppose the market for fresh pork is a competitive market. Initially, it is operating at its long-run competitive equilibrium at a market price of $50. Owing to the spread of COVID-19, many people turn to buying frozen meat once a week rather than fresh pork every day. As a result, the market price of fresh pork reduces to $30.
a. With the aid of a pair of market-and-firm diagrams, illustrate how this would affect the equilibrium price and quantity in the fresh pork market and the output of a typical butcher of fresh pork in the short-run.
b. Suppose, for the situation in (a), the average cost of a typical butcher of fresh pork is $40, which includes $15 on buying meat from suppliers, $12 on paying rent, $8 on paying hourly wages on staff, and $5 on other costs. Explain whether a typical butcher should shut down in the short run.
Solutions
Rahul Sunny answered 1 year agoRelated Solutions
Suppose the market for fresh pork is a competitive market. Initially, it is operating at its long-run competitive equilibrium at a market price of $50.
Suppose the market for fresh pork is a competitive market. Initially, it is operating at its long-run competitive equilibrium at a market price of $50.Owing to the spread of COVID-19, many people turn to buying frozen meat once a week rather than fresh pork every day. As a result, the market price of fresh pork reduces to $30.a. With the aid of a pair of market-and-firm diagrams, illustrate how this would affect the equilibrium price and quantity in the fresh...
Suppose the market for fresh pork is a competitive market. Initially, it is operating at its...
Suppose the market for fresh pork is a competitive market.
Initially, it is operating at its long-run competitive equilibrium
at a market price of $50. Owing to the spread of COVID-19, many
people turn to buying frozen meat once a week rather than fresh
pork every day. As a result, the market price of fresh pork reduces
to $30.
a. With the aid of a pair of market-and-firm diagrams,
illustrate how this would affect the equilibrium price and quantity
in...
Suppose the market for fresh pork is a competitive market. Initially, it is operating at its...
Suppose the market for fresh pork is a competitive market.
Initially, it is operating at its long-run competitive equilibrium
at a market price of $50. Owing to the spread of COVID-19, many
people turn to buying frozen meat once a week rather than fresh
pork every day. As a result, the market price of fresh pork reduces
to $30. a. With the aid of a pair of market-and-firm diagrams,
illustrate how this would affect the equilibrium price and quantity
in...
Suppose the market for fresh pork is a competitive market. Initially, it is operating at its...
Suppose the market for fresh pork is a competitive market.
Initially, it is operating at its long-run competitive equilibrium
at a market price of $50. Owing to the spread of COVID-19, many
people turn to buying frozen meat once a week rather than fresh
pork every day. As a result, the market price of fresh pork reduces
to $30. a. With the aid of a pair of market-and-firm diagrams,
illustrate how this would affect the equilibrium price and quantity
in...
Suppose the market for fresh pork is a competitive market. Initially, it is operating at its...
Suppose the market for fresh pork is a competitive market.
Initially, it is operating at its long-run competitive equilibrium
at a market price of $50. Owing to the spread of COVID-19, many
people turn to buying frozen meat once a week rather than fresh
pork every day. As a result, the market price of fresh pork reduces
to $30. a. With the aid of a pair of market-and-firm diagrams,
illustrate how this would affect the equilibrium price and quantity
in...
1. Suppose the market for fresh pork is a competitive market. Initially, it is operating at...
1. Suppose the market for fresh pork is a competitive market.
Initially, it is operating at its long-run competitive equilibrium
at a market price of $50. Owing to the spread of COVID-19, many
people turn to buying frozen meat once a week rather than fresh
pork every day. As a result, the market price of fresh pork reduces
to $30.
a. With the aid of a pair of market-and-firm diagrams,
illustrate how this would affect the equilibrium price and quantity...
A perfectly competitive market is initially in long-run competitive equilibrium. Then, market demand falls. By the...
A perfectly competitive market is initially in long-run
competitive equilibrium. Then, market demand falls. By the time all
adjustments have been made, price will be __________ its original
level if the industry is a(n) __________ costs industry.
a. above; decreasing
b. at; constant
c. at; increasing
d. below; increasing
e. a and d
Suppose that a perfectly competitive industry is in long-run equilibrium. Then the price of a complementary...
Suppose that a perfectly competitive industry is in long-run
equilibrium. Then the price of a complementary good decreases. Use
two graphs, one for the firm, and one for the industry (and words)
to explain what will happen in the short run, and then the long
run, to: a. The market demand curve? b. The market supply curve? c.
Market price? d. Market output? e. Representative firm output? f.
Representative firm profit?
1.In long-run competitive market equilibrium, price equals _______ and economic profit is ______.
1.In long-run competitive market equilibrium, price equals
_______ and economic profit is ______.A. Minimum average variable cost; greater than zeroB. Minimum average total cost; zeroC. Maximum marginal cost; zeroD.Minimum fixed cost; greater than zero2. Which of the following market structures has the highest
barriers to
entry? A. Perfect
competition B.
Monopoly C. Monopolistic
competition D. Oligopoly3. Which of the following is consistent with a competitive
market? A. A small number of
firms B. Exit of small firms when profits are high for large
firms C. Zero economic...
Suppose bicycles are produced by a competitive constant-cost industry, which is initially in a long-run equilibrium....
Suppose bicycles are produced by a competitive constant-cost
industry, which is initially in a long-run equilibrium. For the
following situation, design a supply-demand diagram that shows how
market price and quantity will be affected in both the short run
and the long run. In your diagrams, show the short-run supply,
long-run supply, and demand curves, along with any shifts in these
curves. Label the initial long-run equilibrium E0, the
new short-run equilibrium E1, and the new long-run
equilibrium E2.
Bicycling...
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