(Solved): Consider the graphs of a constant cost industry and a perfectly competitive firm within it. Initial ...

Consider the graphs of a constant cost industry and a perfectly competitive firm within it. Initially, the industry is in long-run equilibrium at point E, then demand shifts from Demand1 to Demand2. Answer the questions where P is the price, MR is the marginal revenue, AR is the average revenue, MC is the marginal cost, SRATC is the short-run average total cost, and LRAC is the long-run average total cost. Manipulate both of the graphs to reflect the adjustments that yield the long-run equilibrium. Manipulate both of the graphs to reflect the adjustments that yield the long-run equilibrium. 10 10 Supply SRATC Demand! Demand2 80 90 100 9 8 0 7 6 3 2 1 0 10 20 30 40 50 60 Quantity (in thousands) 70 9 8 7 6 5 3 2 1 0 0 MC 10 20 30 40 50 Quantity 60 70 80 LRAC P-MR-AI 90 100 Question 20 of 20 > The demand shift results in a short-run economic loss for the firm. a short-run economic profit for the firm. O a long-run economic profit for the firm. O a short-run economic proft of 0. Long-run equilibrium is restored in this industry when short-run economic losses attract resources. In the long run, firms enter the industry, increasing market price and driving economic profit to 0. Long-run equilibrium is restored when P = LRAC = SRATC= MC. short-run economic profits attract resources. In the long run, firms enter the industry, reducing market price and driving economic profit to 0. Long-run equilibrium is restored when P> LRAC = SRATC = MC. short-run economic profits attract resources. In the long run, firms enter the industry, reducing market price and driving economic profit to 0. Long-run equilibrium is restored when P = LRAC = SRATC = MC. O short-run economic losses cause resources to flow to other industries. In the long run, firms exit the industry. reducing market price and driving economic profit to 0. Long-run equilibrium is restored when P = LRAC = SRATC = MC.