Assume that the gold-mining industry is competitive.

If the demand for gold remains high, what would happen to the price over time? Specifically, would the new long-run equilibrium price be above, below, or equal to the short-run equilibrium price in the previous part? Is it possible for the new long-run equilibrium price to be above the original long-run equilibrium price? Explain.

Which set of characteristics below best describes the basic features of monopolistic competition?

a. Barriers to entry, many sellers, differentiated products

b. No barriers to entry, many sellers, identical products

c. No barriers to entry, one seller, differentiated products

d. No barriers to entry, many sellers, differentiated products

Which of the following is a characteristic of monopolistic competition? A. a standardized product B. many sellers C. substantial barriers to entry D. positive long-run profits E. a perfectly elastic demand curve

A firm is profitable if A. TR < TC. B. AR < ATC. C. MC < ATC. D. ATC < P. E. ATC > MC.

You are thinking about setting up a lemonade stand. The stand itself costs $\$ 200$. The ingredients for each cup of lemonade cost $\$ 0.50$.

a. What is your fixed cost of doing business? What is your variable cost per cup?

b. Construct a table showing your total cost, average total cost, and marginal cost for output levels varying from $0$ to $10$ gallons. (Hint: There are $16$ cups in a gallon.) Draw the three cost curves.

You are thinking about setting up a lemonade stand. The stand itself costs $200. The ingredients for each cup of lemonade cost$0.50. a. What is your fixed cost of doing business? What is your variable cost per cup? b. Construct a table showing your total cost, average total cost, and marginal cost for output levels varying from 0 to 10 gallons. (Hint: There are 16 cups in a gallon.) Draw the three cost curves.

Draw the marginal-cost and average-total-cost curve for a typical firm. Explain why the curves have the shapes that they do and why they cross where they do.

Draw the marginal-cost and average-total-cost curves for a typical firm. Explain why the curves have the shapes that they do and why they cross where they do.

Suppose there are 1,000 hot pretzel stands operating in New York City. Each stand has the usual U-shaped average-total-cost curve. The market demand curve for pretzels slopes downward, and the market for pretzels is in long-run competitive equilibrium.

Suppose that the city decides to charge a fee for the 800 licenses, all of which are quickly sold. How will the size of the fee affect the number of pretzels sold by an individualstand? How will it affect the price of pretzels in the city?

Suppose there are 1,000 hot pretzel stands operating in New York City. Each stand has the usual U-shaped average-total-cost curve. The market demand curve for pretzels slopes downward, and the market for pretzels is in long-run competitive equilibrium.

The city wants to raise as much revenue as possible, while ensuring that all 800 licenses are sold. How high should the city set the license fee? Show the answer on your graph.

Suppose there are 1,000 hot pretzel stands operating in New York City. Each stand has the usual U-shaped average-total-cost curve. The market demand curve for pretzels slopes downward, and the market for pretzels is in long-run competitive equilibrium.

Suppose that the city decides to charge a fee for the 800 licenses, all of which are quickly sold. How will the size of the fee affect the number of pretzels sold by an individualstand? How will it affect the price of pretzels in the city?

Suppose there are 1,000 hot pretzel stands operating in New York City. Each stand has the usual U-shaped average-total-cost curve. The market demand curve for pretzels slopes downward, and the market for pretzels is in long-run competitive equilibrium.

The city decides to restrict the number of pretzel-stand licenses, reducing the number of stands to only 800. What effect will this action have on the market and on an individual stand that is still operating? Draw graphs to illustrate your answer.

Suppose there are 1,000 hot pretzel stands operating in New York City. Each stand has the usual U-shaped average-total-cost curve. The market demand curve for pretzels slopes downward, and the market for pretzels is in long-run competitive equilibrium.

Draw the current equilibrium, using graphs for the entire market and for an individual pretzel stand.

An industry currently has 100 firms, all of which have fixed costs of $16 and average variable cost as follows:

$$\begin{array}{cc} \text { Quantity } & \text { Average Variable Cost } \\ \hline 1 & \$ 1 \\ 2 & 2 \\ 3 & 3 \\ 4 & 4 \\ 5 & 5 \\ 6 & 6 \end{array}$$

Graph the long-run supply curve for this market.