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For this assignment, imagine you are an entrepreneur in the perfectly competitiv
For this assignment, imagine you are an entrepreneur in the perfectly competitive gizmo market. By hand, draw graphs to illustrate each of the situations below.
1.) First, next to each other, by hand draw the graph of the firm and the graph of the market in long run equilibrium. (Something important I mentioned before should line up!).
For the graph of your firm, include the MR curve, MC curve, and AC curve.
For the whole market graph include the S and D curves.
Do not include any other curves or I will think you plagiarized.
Label all axes.
Indicate the equilibrium price and quantity on the graph of the firm and on the graph of the market.
2.) Now suppose that a new more productive technology is developed for manufacturing gizmos. Draw a new set of graphs that show this change. Graphically show what impact will this have on our gizmo firm in the short run (in terms of the firm’s revenues, costs, and profit.) What curves will move? Label are they making a profit, loss, or breaking even?
3.) Finally, show what would happen in the long term. Draw a final set of graphs to show this. How will the overall gizmo market be affected? What curves will move? What will happen to the firm’s profit/loss in the long run? Label are they making a profit, loss, or breaking even?
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