Assume that a perfectly competitive market in long-run equilibrium with firms earning zero profit experiences a...

 

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Assume that a perfectly competitive market in long-run equilibrium with firms earning zero profit experiences a sudden increase in demand for its good. in marginal revenue will cause firms to As a result, in the long run, the the market. The graph on the right shows the initial market equilibrium, along with the new demand curve that resulted from the sudden increase in demand. How does a change in the number of firms in the market impact the market equilibrium? 1.) Using the point drawing tool, illustrate the new short-run equilibrium as a result of the demand curve changing from D, to D₂. 2.) Using the 3-point curve drawing tool,show the long-run effect of the change in the number of firms, as discussed above. Label this curve "S₂" GTB Price 10- 9- 8- 5- 4- 3 24 1- 0- D D 48 Q ROO Assume that a perfectly competitive market in long-run equilibrium with firms earning zero profit experiences a sudden increase in demand for its good. in marginal revenue will cause firms to As a result, in the long run, the the market. The graph on the right shows the initial market equilibrium, along with the new demand curve that resulted from the sudden increase in demand. How does a change in the number of firms in the market impact the market equilibrium? 1.) Using the point drawing tool, illustrate the new short-run equilibrium as a result of the demand curve changing from D, to D₂. 2.) Using the 3-point curve drawing tool,show the long-run effect of the change in the number of firms, as discussed above. Label this curve "S₂" GTB Price 10- 9- 8- 5- 4- 3 24 1- 0- D D 48 Q ROO

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Impact of Demand Increase on Perfectly Competitive Market Slide 1 Title Demand Increase in Perfectly Competitive Market Content A perfectly competitive market initially in longrun equilibrium experien... View the full answer