Attempts $\backslash (\backslash$square $\backslash$quad $\backslash$square $\backslash$quad $\backslash$square $\backslash$quad $\backslash )$ Average $/4$

$7.$ Short$-$run supply and long$-$run equilibrium

Consider the competitive market for rhenium. Assume that no matter how many firms operate in the industry, every firm is identical and faces the same marginal cost $($MC$),$ average tatal cost $($ATC$),$ and average variable cost $($AVC$)$ curves plotted in the following graph.

The fallowing graph plots the market demand curve for thenium.

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 partion 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 symbal$)$ to plot the shart$-$run industry supply curve when there are $20$ fims. Finally, use the green paints $($triangle symbol$)$ to plat the short$-$run industry supply curve when there are $30$ firms:

If there were $10$ firms in this market, the shart$-$run equilibrium price of rhenium would be $($ would $-$ Therefore, in the lang run, firms wauld

per pound. At that price, firms in this industry the rhenium market.

Because you know that competitive firms earn $\_$ economic profit in the long run, you know the long$-$run equilibrium price must be $\backslash (\backslash$quad $\backslash )$ per pound. From the graph, you can see that this means there will be firms operating in the rhenium industry in long$-$run equilibrium.

True or False: Assuming implicit costs are positive, each of the firms aperating in this industry in the long run earns negative accounting profit.

True

False and

Suppose there are $9$ firms in this industry, each of which has the cost curves previousty shown.

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