Jeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedCompetitive Firms and MarketsJeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedFigure 8.01 Residual Demand Curvep , $ permetal chair93 4340 0 500 527q, Thousand metalchairs per yearQ, Thousand metalchairs per year66100636610063SoDp, $ permetal chair(a) Firm(b) MarketDrJeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedFigure 8.02 Maximizing Profitπ, Profit∆π> 0∆π< 0q* Quantity, q, Unitsper dayProfit11π*0Jeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedFigure 8.03 How a Competitive Firm Maximizes ProfitCost, revenue,Thousand $2841400q me per year2,2724,8004261,846100–100(a)1MR=8π* = $426,000π*π(q)Cost, C Revenuep, $ per tone2841400q, Thousand metric tons of lime per year86.50610(b)p = MRπ* = $426,000ACMC, Thousand metric tons of liJeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedSolved Problem 8.01p, $ per umitq1q2e1ττe2q, Units per yearpp = MRAC1MC1MC2= MC1+ τAC2= AC1+ τAC2(q2)AC1(q1)ABJeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedFigure 8.04 The Short-Run Shutdown Decisionp, $ per ton10050 140q, Thousand metric tons of lime per yearAVCACMCpaeb05.145.506.006.125.00A = $62,000B = $36,000Jeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedFigure 8.05 How the Profit-Maximizing Quantity Varies with Pricep, $ per tonq3= 215 q4= 285q1= 50 q2= 140e1e2e3e4p2p1p3p40q, Thousand metric tons of lime per year6785AVCMCACSJeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedFigure 8.06 Effects of an Increase in the Cost of Materials on the Vegetable Oil Supply Curvep, $ per tone1e20 100 178145 q, Hundred metric tons of oil per year78.6612AVC1MC1AVC2S1S2MC2pJeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedFigure 8.07 Short-Run Market Supply with Five Identical Lime Firmsp, $ per ton14050 175q, Thousand metric tonsof lime per year6.47 6.4767p, $ per ton750AVC(a) FirmMC20015010050 250 700Q, Thousand metric tonsof lime per year650(b) MarketS3S4S5S2S1S1Jeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedFigure 8.08 Short-Run Market Supply with Two Different Lime Firmsp, $ per ton100 140 165 215 315 45025 50S2SS10q, Q, Thousand metric tons of lime per year6785Jeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedFigure 8.09 Short-Run Competitive Equilibrium in the Lime Market p, $ per tonq1= 215q2= 50 Q1= 1,075Q2= 2500q, Thousand metric tonsof lime per yearQ, Thousand metric tonsof lime per year6.976.20650567878e2e1E2SE1p, $ per ton(a) Firm (b) MarketAVCACD2S1D1ACBJeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedFigure 8.10 Short-Run Effect of a Specific Tax in the Lime Marketp, $ per unitττe1e2p2p1q2q1q, Units per year Q2=nq2Q1=nq1q, Units per yearAVCAVC+ τMC + τMCS1+ τS+ τS1SDp1+ τ(a) Firmp, $ per unitE1E2(b) MarketττJeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedFigure 8.11 The Short-Run and Long-Run Supply Curvesp, $ per unit50 110 q, Units per year25242835200pSRACLRMCLRACSRMCSRAVCBASSRSLRJeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedTable 8.01 Entry and Exit Rates in Selected U.S. Industries,1972-1982Jeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedFigure 8.12a Long-Run Firm and Market Supply with Identical Vegetable Oil Firmsp, $ per unit150LRACLRMC(a) Firmq, Hundred metric tons of oil per year10S10Jeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedFigure 8.12b Long-Run Firm and Market Supply with Identical Vegetable Oil Firmsp, $ per unit(b) MarketQ, Hundred metric tons of oil per yearLong-run market supply100Jeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedApplication Upward-Sloping Long-Run Supply Curve for Cotton0.71Price, $ per kg0 123IranUnited StatesNicaragua, TurkeyBrazilAustraliaArgentinaPakistan4566.8Cotton, billion kg per year1.081.151.271.431.561.71SJeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedFigure 8.13 Long-Run Market Supply in an Increasing-Cost Marketp, $ per unitq1q2Q1= n1q1Q2= n2q2q, Units per year Q, Units per yearp1p2e2e1E2SE1p, $ per unit(a) Firm (b) MarketAC2MC2MC1AC1Jeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedFigure 8.14 Long-Run Market Supply in an Decreasing-Cost Marketp, $ per unitq1q2Q1= n1q1Q2= n2q2q, Units per year Q, Units per yearp1p2e2e1E2SE1p, $ per unit(a) Firm(b) MarketAC2MC2MC1AC1Jeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedFigure 8.15 The Short-Run and Long-Run Equilibria for Vegetable Oil p, $ per tone1f21000 150 165q, Hundred metric tonsof oil per year11107MCAVC(a) FirmACp, $ per tonF1E1F2E21,5000 2,000 3,300 3,600Q, Hundred metric tonsof oil per year11107(b) MarketD1SSRSLRD2fJeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedSolved Problem 8.3p, $ per unitq1q2Q1= n1q1Q2= n2q2q, Units per year Q, Units per yearp1p2p1p2e2e1E2S2S1DE1p, $ per unit(a) Firm(b) MarketMCAC1AC2+ q/Jeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedFigure 8.16 Rentp, $ per bushelq *π* = Rentq, Bushels of tomatoes per yearAC (including rent)AC (excluding
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