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Draw a graph with the market demand curve

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Suppose an industry is initially in both short and long equilibrium.

(a) Please draw a graph with the market demand curve and short-run market supply curve, and please draw another graph for a U-shaped average cost curve of a producer in the competitive market.

(b) Suppose producers are identical. Please use the graphs drawn in part (a) to illustrate how a decrease in demand affects market output, market price, the number of firms in the market in both short and long-run equilibrium.

(c) Suppose producers are not identical. Please use the graphs to illustrate how a decrease in demand affects market output, market price, the number of firms in the market in both short and long-run equilibrium.

(d) Is the long-run increase in industry output larger in the long run than in the short run when firms are not identical?

Reference no: EM132478617

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