Question: This question is based on the section The Long-Run Industry Supply Curve found on this book's MyEconLab (www.myeconlab.com). A major theme of this chapter is

This question is based on the section The Long-Run Industry Supply Curve found on this book's MyEconLab (www.myeconlab.com). A major theme of this chapter is the role that free entry and exit play in determining a competitive industry's long-run equilibrium. Keeping this theme in mind, consider the following statement:
In Industry X, demand and supply do determine price in the short run, but in the long run, only supply matters.
a. Assuming that Industry X is a constant-cost industry, use a demand-and-supply diagram to illustrate why the statement is exactly correct.
b. Now, assuming that Industry X is an increasing-cost industry, show in a demand-and-supply diagram why the statement is not quite correct.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a With aconstantcost industry the statement is correct In the lefthand diagrambelow suppose that E 0 ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

Study Guide Strategic Business Management By A. J. Cataldo About the Author A. J. Cataldo is currently a professor of accounting at West Chester University, in West Chester, Pennsylvania. He holds a...

Files 12:56 PM Mon May 16 25% Unit+2+workbook Q . . . Home Insert Draw Layout Review View Calibri Bold (Body) 36 B I U aAv A v Unit 2-Supply and Demand Name: HR: LAW OF SUPPLY Use the space below to...

To answer these questions, you will need to read Chapter 9, Market Equilibrium & Product Price - Imperfect Competition and please good Good format. #. Explain the 3 types of "Imperfect" market...

\f\f\fChapter 2 Service Strategy Learning Objectives After completing this chapter, you should be able to: 1. Formulate a strategic service vision. 2. Describe how a service competes using the three...

Hi, you will find the instructions in the attached file, thank you, Using the regression results and the other computations from Assignment 1, determine the market structure in which the low-calorie...

4 Files 12:47 PM Mon May 16 Insert Draw Layout Review View Unit 3Microec0nomics Name: ELASTICITY Use the space below to take notes during class. Elastic: Unit Elastic: Inelastic: Perfect...

Lecture Notes DL MGT 5100 - Distribution Management Spring 2017 1.0. Day one, Monday, Monday, 9 Jan 17 1.1. Reading Assignments: Chapters 1 and 2 1.1.1. I intend to follow the book so as to provide a...

Find the point on the ellipse x + 6y + 3xy = 10 with the greatest x-coordinate. (Use decimal notation and fractions where needed. Give your answer as the coordinates of a point in the form (*,*).)...

Joseph Campbell is the President and Co-Founder of Campbell Corporation the worlds first biodegradable packaging for new cleaners and is reviewing the Profit and Loss Statement for the Fiscal Year...

The accumulated fund of non - profit making organizations is calculated as total: Question 3 Answer a . income less total expenditure b . liabilities plus total assets c . assets less total...

Compare and contrast the exercise procedure for stock options with that for index options. What major advantage does exercising an index option have over exercising a stock option?

Draw the following incentive contracts on the same graph, with gross profit (revenue minus costs for all inputs, not including payments to the manager) for the firm on the horizontal axis and manager...

Clare manages a piano store. Her utility function is given by Utility = w 100 Where w is the total of all monetary payments to her and 100 represents the cost to her of the effort of running the...

Return to problem 15.2. Suppose that Clare can still choose to exert effort, as in the previous problem, but that she can also choose not to exert effort. If she does not exert effort, she has no...

2 3 points On January 2, 2022 Parent Co. acquired 60% of Subsidiary Inc. for $690,000. On that date, Subsidiary reported common stock $ 190,000, retained earnings of $82,000. A building (with 10-year...

35 of 35 View Policies Current Attempt in Progress -/5.72 ! In the Waterway Industries, indirect labor is budgeted for $108000 and factory supervision is budgeted for $54000 at normal capacity of...

Required information [The following information applies to the questions displayed below.] Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales...