Place the orange line (square symbol) on the following graph to show the most likely long-run supply curve for persimmons.

The following graph shows the short-run supply curve for persimmons.

Place the orange line (square symbol) on the following graph to show the most likely long-run supply curve for persimmons. (Note: Place the points of the line either on M and R or on M and W.)

Expert Solution

Time period impacts the elasticity of supply and thereby the shape of supply curve.

In long-run, producers can change all factors as the price of good changes because in long run all factors are variable.

Thus, response to change in price is greater in long run.

Due to this, supply is elastic in long run.

When supply is elastic then supply curve is flatter.

On the other hand, in short run, supply is generally inelastic and therefore supply curve is steeper.

if we join point M and W then long run supply curve would be steeper than the short run supply. This cannot happen as long run supply curve is always flatter than the short run supply curve.

If we join point M and R then long run supply curve will be flatter then the short run supply curve.

So, in given case, long run supply curve will be formed by joining point M and R.

Following is the required figure -

Rahul Sunny answered 2 years ago

Place the orange line (square symbol) on the following graph to show the most likely long-run supply curve for persimmons

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