# Problems and applications q5 1 short run 2 long run

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5. Problems and Applications Q5 1. Short Run 2. Long Run STEP: 1 of 2 Suppose the book-printing industry is competitive and begins in a long-run equilibrium. Then Hi-Tech Printing Company invents a new process that sharply reduces the cost of printing books. Suppose Hi-Tech's patent prevents other firms from using the new technology. Which of the following statements are true about what happens in the short run? Check all that apply. Hi-Tech's average-total-cost curve remains the same. Hi-Tech's marginal-cost curve shifts downward.
Hi-Tech's profits increase. The price of books decreases. Points: 1 / 1 Close Explanation Explanation: The new process reduces Hi-Tech's marginal cost and average total cost, causing both curves to shift downward. However, the price remains the same because other firms cannot use the new process, so Hi-Tech earns positive profits. See Section: Measuring Profit in Our Graph for the Competitive Firm.
Suppose the book-printing industry is competitive and begins in a long-run equilibrium. Then Hi-Tech Printing Company invents a new process that sharply reduces the cost of printing books. The following graph shows Hi-Tech's initial marginal-cost curve ( MC 1 MC1) and average-total-cost curve ( ATC 1 ATC1) before the new technology, and its marginal-cost curve ( MC 2 MC2) and average- total-cost curve ( ATC 2 ATC2) after the new technology.
Now suppose the patent expires and other firms are free to use the technology. Which of the following statements are true about what happens in the long run? Check all that apply. Points: 1 / 1 Close Explanation
Section: The Long Run: Market Supply with Entry and Exit. TOTAL SCORE: 2/2
6. Problems and Applications Q6 A firm in a competitive market receives \$1,000 in total revenue and has marginal revenue of \$20. The firm's average revenue is \$20 , and 50 units were sold. Points: 1 / 1 Close Explanation