7. Short-run supply and long-run equilibrium Consider the competitive market for copper Assume that, regardless of...

7. Short-run supply and long-run equilibrium Consider the competitive market for copper Assume that, regardless of how manyfims are in the ndustry, every fim in the industry s dentcal and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph 80 72 64 48 32 244 AVC 3

The following dagram shows the market démand for copper Use the orange points (square symbol) to plot the initial short -run industry supply curve when there are 10 firms in the market. Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.,) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 20 firms. Finaly, use the green points (triangle symbol) to plot the short run industry supply curve when there are 30 firms 90 72 64 Supply (10 fms) 56 4 40 32 Supply (20 fems) upply (30 fe 24 300 960 1060 1

Supply (30 firms) 24 16 0 120 240 360 480 600 720 840 960 1080 1200 QUANTITY (Thousands of pounds) If there were 10 firms in this market, the short-run equilbrium price of copper would be s per pound. At that price, fims in this industry Therefore, in the long run, firms would the copper market would economic profit in the long run, you know the long-nun equilbnium price must Because you know that competitive firms eam be f . firms operating in the copper industry in long-rum per pound. From the graph, you can see that this means there will be the long nun eams positive accounting profi True or False: Assuming implcit costs are positive, each of the firms operating in this industry in O True False