Part 1The graph shows the costs of Quick Copy, one of the many copy shops near campus.The market price of copying one page is 10 cents.In the long run, firms ______ the market, the market price is ______cents a page and the equilibrium quantity is ______ pages an hour. Part 1
A. enter; 2; 20 B. enter; 6; 60 C. exit; 10; 80 D. exit; 6; 60 Part 1
02040608010002468101214Quantity (pages per hour)Price (cents per page)ATCATCMCMC Edit coordinates (0,0) x y graph

Question

Part 1The graph shows the costs of Quick​ Copy, one of the many copy shops near campus.The market price of copying one page is 10 cents.In the long​ run, firms​ ______ the​ market, the market price is​ ______cents a page and the equilibrium quantity is​ ______ pages an hour. Part 1
A. ​enter; 2; 20 B. ​enter; 6; 60 C. ​exit; 10; 80 D. ​exit; 6; 60 Part 1
02040608010002468101214Quantity (pages per hour)Price (cents per page)ATCATCMCMC Edit coordinates (0,0) x y graph

BlackTom AI · Accepted Answer

Question restatement:
The graph presents costs for Quick Copy, with a given market price of copying one page at 10 cents. In the long run, firms either enter or exit the market, and the market price and equilibrium quantity adjust accordingly. We are asked to choose among four options the long-run outcome in terms of whether firms enter or exit, the resulting market price (in cents per page), and the equilibrium quantity (pages per hour).

Option A: enter; 2; 20
- Enter implies that in the long run firms anticipate profits to be positive at the current price, so new firms will enter the market, increasing supply and pushing the price down until profits are zero. If the long-run outcome is that the price is 2 cents and the equilibrium quantity is 20 pages/hour, this would suggest that the market price has fallen far below the given 10 cents, which would only happen if the process of entry has driven price down to the minimum average total cost or below. The stated price of 2 cents is inconsistent with a typical long-run outcome starting from 10 cents unless the graph indicates a very high ATC at the current output and overpowering entry effects. This option raises questions about whether entry would ever be optimal at such a low price and whether the corresponding quantity aligns with the intersection of marginal cost and demand at that price.
- Key check: In standard long-run competitive models, entry continues until P = min ATC, not simply until P drops to an arbitrary level like 2 cents. A price as low as 2 cents would only materialize if the minimum ATC were at or below 2, and the corresponding profitable or zero-profit condition were satisfied at that output. Without evidence from the graph that min ATC is 2 cents, this option looks dubious.

Option B: enter; 6; 60
- Enter indicates positive profitability or the expectation of zero-profit equilibrium with entry pressure, leading to more firms entering until P = min ATC. The quantity 60 pages/hour together with a price of 6 cents would imply a specific ATC and MC structure where price equals MC at the profit-maximizing output, or where P has fallen to the minimum ATC level consistent with zero profits. If the graph indicates that at the long-run equilibrium price the market clears at 60 pages/hour, and that this price is consistent with the minimum average total cost, this option could reflect the classic long-run adjustment mechanism. The internal consistency to check is whether the 6-cent price matches min ATC and whether 60 pages/hour is the output at which MC = MR = P.
- Key check: For a long-run equilibrium with entry, the price must equal min ATC, and total quantity is determined by where MC = MR. If the graph indeed shows min ATC occurring at a price of 6 cents and the corresponding output level is 60 pages/hour, this would align with a standard competitive long-run outcome after entry drives profits to zero.

Option C: exit; 10; 80
- Exit implies that the current price (or the price implied by the graph) is not sufficient to cover long-run average costs at the current scale, so firms would leave until profits vanish or negative profits are eliminated. If the resulting price is 10 cents and the equilibrium quantity is 80 pages/hour, this would mean that at 10 cents the industry is not sustainable and firms are shedding capacity. However, since the given market price is 10 cents, if the long-run action is to exit, it would suggest that the price still exceeds some firms’ average total cost at the current output, causing shutdown in the long run for those firms. The consistency of this option depends on whether ATC at the corresponding output (80 pages/hour) is above 10 cents.
- Key check: In long-run equilibrium, price equals min ATC, and exit occurs when P < ATC. If the graph shows ATC at 10 cents or higher for output 80, exit could be warranted, but if min ATC is at or below 10 and the industry is above that level, exit would be less likely. This option hinges on the relationship between 10-cent price and ATC at 80 pages/hour.

Option D: exit; 6; 60
- Exit with a price of 6 cents and output 60 pages/hour would imply that even at 6 cents, firms cannot cover long-run costs at the current scale, prompting exit. This would require that min ATC is above 6 cents, or that after adjustment the market price is 6 cents at the new equilibrium with reduced quantity. The implication is that 6 cents is insufficient to cover costs at the chosen output, and firms would shrink or leave the market. The critical consideration is whether, according to the graph, the long-run min ATC exceeds 6 cents and whether 60 pages/hour is the corresponding equilibrium output when some firms exit.
- Key check: If the graph indicates that at long-run equilibrium MR = P equals min ATC, and that min ATC is exactly 6, then exit with 60 pages/hour could be plausible only if the system moves to a price where remaining firms operate at zero profit. If min ATC is higher than 6, this option could reflect an ongoing exit process; if min ATC is at or below 6, exit would not be consistent with a long-run equilibrium price of 6.

Synthesis and considerations across options:
- A central principle is that in the long run under perfect competition, price adjusts to equal the minimum average total cost (min ATC). If the starting price is 10 cents per page, the long-run outcome will depend on where min ATC lies relative to 10 cents. If min ATC is exactly 10, there is no incentive for entry or exit and the long-run quantity stabilizes where MC = MR at 10. If min ATC is less than 10, firms will enter until price falls to min ATC, reducing quantity and price accordingly; if min ATC is greater than 10, firms will exit until price rises to min ATC, reducing supply and increasing price.
- The numbers given for price in each option (2, 6, 10, 6) must be interpreted in the context of the graph’s min ATC and the corresponding equilibrium quantity. The quantity values (20, 60, 80, 60) should correspond to the output level at which MC intersects MR at the long-run price and the market clears.
- Without numerical access to the graph’s ATC, MC, and demand details, evaluating which option aligns with the long-run mechanism relies on the internal consistency of each option’s stated price with the rule P = min ATC and the implied output where MC = MR. In standard problems, one expects either a price equal to min ATC (if the graph shows min ATC at 10 cents) or a shift in price due to entry/exit moving toward min ATC.

Note on unresolved specificity:
- The question hinges on the specific ATC/MC curves shown in the graph, which determine min ATC and the corresponding output. Since the graph details aren’t described here beyond the explicit market price of 10 cents, each option’s plausibility can only be judged in light of typical long-run competitive adjustment logic. The alignment between the stated long-run price in an option and the graph’s min ATC value is the decisive compatibility check.
- In practice, you would compare each option’s implied long-run price to the graph’s min ATC to judge whether entry or exit would occur, and whether the equilibrium quantity matches the intersection of MC and MR at that price.

Homework:ch12_qz3

View Explanation

Log in for full answers

Similar Questions

In a perfectly competitive market ____________ determines how value created is divided between consumers and producers.

Which of the following will be true if the firm is in a perfectly competitive market and the price is P1 ?

Zucchini is produced in a perfectly competitive market with a downward-sloping demand curve and an upward- sloping supply curve. Dawson Farm is a typical perfectly competitive farm that produces and sells zucchini at the equilibrium price of $1.75 per pound. Which of the following is true?

In the absence of barriers to entry, a typical firm is currently in long-run equilibrium. Assume there is an increase in the market demand for the good that the firm is producing. Which of the following will happen in the long run?

In a perfectly competitive market, the process of entry and exit will end when firms in the market:

The following figure represents the cost curves and the market price for a perfectly competitive firm. Which of the following statements is true about the long run equilibrium in this market?

The following figure represents the cost curves and the market price for a perfectly competitive firm. Which of the following statements is true about the long run equilibrium in this market?

Question18 Which of the following are not needed for market efficiency? Goods are excludable and rival Consumers and producers are price-takers Homogeneous goods Easy access to goods ResetMaximum marks: 1 Flag question undefined

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler