// LabSRLRCostSpecs.swift. 1/19/2021. import Foundation class LabCostCurvesSpecs { let strLabSRCostCalculationSpecs :String = """ `` Lab Specs // Cost function parameters: Derived from the min AVC point and min ATC point (see documentation) // minAVCq minAVC minATCq minATC 100 75 150 200 // 0: Average variable cost and average total cost minimums. // The initial cubic cost parameters are calculated from the average minimum. // The initial parameters are: 16071.42777 146.4285714 -1.428571429 0.007142857 // Cost function slider parameters: Changes in the the cost parameters from their initial values -10000 10000 1000 0 // 1: Fixed cost -30 100 10 0 // 2: Linear cost -.3 1 .1 0 // 3: Quadratic cost -.002 .01 .001 0 // 4: Cubic cost // Other slider specs -1.0 1.0 .5 0.0 // 5: Long run cost entry factor 0 260 5 0 // 6: Quantity 0.00 300.00 5.00 130.00 // 7: Price -30 30 15 0 // 8: Demand shift 0 1000 10 500 // 9: Number of firms // Graphs q MC,_AVC,_ATC // 10: Cost curve axis names 0 0 250 300 // 11: Cost curve axis data range Q_(1,000s) P // 12: Market axis names // Demand function price coefficient parameter // NB: The slope of the demand curve in P-Q space is the reciprocal // the demand price coefficient parameter -300 // 13: Demand coefficient parameter // Market quantity scale factor 1000 // 14: Market quantity scale factor F // 15: Adjust text values `` Prob Specs ` ******** Problem 0 Start Screen 1 - Short-Run Marginal Cost Curve Calculations // 0: Title CostCurve // 1: Prob mode: CostCurve, ProfitMax, Market // Visibility specs N N N N // 2: Cost sliders: FixedC LinearVC QuadVC CubicVC B N N N N // 3: Input sliders: Quantity, Price, DemandShift, NbrOfFirms, EntryCostFactor T F // 4: Graphs: Cost Market T F F F // 5: MC AVC ATC Demand Curves: True, False N N N // 6: IS SS LS curves: Trace, Entire, None // NB: IS denotes the individual firm's supply curve 0 // 7: Initial quantity for CostCurve or equilibrium price for others ` Text Start // 8: Text `RED`BLDObjective:`BLD Check to be certain that the lab is calculating the firm's marginal cost correctly.`BLK Use the quantity scrollbar below the graph to specify a quantity of 10. Using the total cost information in the above table and a calculator, compute the firm's marginal cost? Compare your calculation to the marginal cost value reported by the lab. Do the same for a quantity of 80 and a quantity of 150. `BLDQuestion:`BLD Is the lab calculating the firm's marginal cost correctly? ` Prob End ` ******** Problem 1 Start Screen 2 - Short-Run Average Variable Cost Curve Calculations // 0: Title CostCurve // 1: Prob mode: CostCurve, ProfitMax, Market // Visibility specs N N N N // 2: Cost sliders: FixedC LinearVC QuadVC CubicVC B N N N N // 3: Input sliders: Quantity, Price, DemandShift, NbrOfFirms, EntryCostFactor T F // 4: Graphs: Cost Market F T F F // 5: MC AVC ATC Demand Curves: True, False N N N // 6: IS SS LS curves: Trace, Entire, None // IS: Individual firm supply curve 0 // 7: Initial equilibrium price ` Text Start // 8: Text `RED`BLDObjective:`BLD Check to be certain that the lab is calculating the firm's average variable cost correctly.`BLK Use the quantity scrollbar below the graph to specify a quantity of 10. Using the variable cost information in the above table and a calculator, compute the firm's average variable cost. Compare your calculation to the average variable cost value reported by the lab. Do the same for a quantity of 80 and a quantity of 150. `BLDQuestion:`BLD Is the lab calculating the firm's average variable cost correctly? ` Prob End ` ******** Problem 2 Start Screen 3 - Short-Run Average Total Cost Curve Calculations // 0: Title CostCurve // 1: Prob mode: CostCurve, ProfitMax, Market // Visibility specs N N N N // 2: Cost sliders: FixedC LinearVC QuadVC CubicVC B N N N N // 3: Input sliders: Quantity, Price, DemandShift, NbrOfFirms, EntryCostFactor T F // 4: Graphs: Cost Market F F T F // 5: MC AVC ATC Demand Curves: True, False N N N // 6: IS SS LS curves: Trace, Entire, None // IS: Individual firm supply curve 80 // 7: Initial equilibrium price ` Text Start // 8: Text `RED`BLDObjective:`BLD Check to be certain that the lab is calculating the firm's average total cost correctly.`BLK Use the quantity scrollbar below the graph to specify a quantity of 80. Using the total cost information in the above table and a calculator, compute the firm's average total cost? Compare your calculation to the average total cost value reported by the lab. Do the same for a quantity of 150 and 180. `BLDQuestion:`BLD Is the lab calculating the firm's average total cost correctly? ` Prob End """ let strLabSRCostRelationshipSpecs :String = """ `` Lab Specs // Cost function parameters: Derived from the min AVC point and min ATC point (see documentation) // minAVCq minAVC minATCq minATC 100 75 150 200 // 0: Cost function parameters // The parameters themselves are: 16071.42777 146.4285714 -1.428571429 0.007142857 // Cost function slider parameters -10000 10000 1000 0 // 1: Fixed cost -30 100 10 0 // 2: Linear cost -.3 1 .1 0 // 3: Quadratic cost -.002 .01 .001 0 // 4: Cubic cost // Scrollbar specs -1.0 1.0 .5 0.0 // 5: Long run cost factor 0 260 2 0 // 6: Quantity 0.00 300.00 5.00 130.00 // 7: Price -30 30 15 0 // 8: Demand shift 0 1000 10 500 // 9: Number of firms // Graphs q MC,_AVC,_ATC // 10: Cost curve axis names 0 0 250 300 // 11: Cost curve axis data range Q_(1,000s) P // 12: Market axis names // Demand function price coef // NB: The slope of the demand curve in P-Q space is the reciprocal // the x-axis of the market graph -300 // 13: Demand coefficient parameter // Market quantity scale factor 1000 // 14: Market quantity scale factor F // 15: Adjust text values `` Prob Specs ` ******** Problem 0 Start Screen 1 - Short-Run Marginal Cost and Average Variable Cost Curves // 0: Title CostCurve // 1: Prob mode: CostCurve, ProfitMax, Market // Visibility specs N N N N // 2: Cost sliders: FixedC LinearVC QuadVC CubicVC B N N N N // 3: Input sliders: Quantity, Price, DemandShift, NbrOfFirms, EntryCostFactor T F // 4: Graphs: Cost Market T T F F // 5: MC AVC ATC Demand Curves: True, False N N N // 6: IS SS LS curves: Trace, Entire, None // IS: Individual firm supply curve 0 // 7: Initial equilibrium price ` Text Start // 8: Text `RED`BLDObjective:`BLD Show that the firm's marginal cost curve and average variable cost curve intersect at minimum average variable cost.`BLK Gradually increase the quantity from 0 to 100: `IND`BLDQuestion:`BLD When the firm's marginal cost is less than its average variable cost, is the average variable cost curve falling or rising? `IND Now, gradually increase the quantity from 100 to 170: `IND`BLDQuestion:`BLD When the firm's marginal cost is greater than its average variable cost, is the average variable cost curve falling or rising? `IND `BLDQuestion:`BLD Why do the firm's marginal cost curve and average variable cost curve intersect at minimum average variable cost? ` Prob End ` ******** Problem 1 Start Screen 2 - Short-Run Marginal Cost and Average Total Cost Curves // 0: Title CostCurve // 1: Prob mode: CostCurve, ProfitMax, Market // Visibility specs N N N N // 2: Cost sliders: FixedC LinearVC QuadVC CubicVC B N N N N // 3: Input sliders: Quantity, Price, DemandShift, NbrOfFirms, EntryCostFactor T F // 4: Graphs: Cost Market T F T F // 5: MC AVC ATC Demand Curves: True, False N N N // 6: IS SS LS curves: Trace, Entire, None // IS: Individual firm supply curve 80 // 7: Initial equilibrium price ` Text Start // 8: Text `RED`BLDObjective:`BLD Show that the firm's marginal cost curve and average total cost curve intersect at minimum average total cost.`BLK Gradually increase the quantity from 80 to 150: `IND`BLDQuestion:`BLD When the firm's marginal cost is less than its average total cost, is the average total cost curve falling or rising? `IND Now, gradually increase the quantity from 150 to 170: `IND`BLDQuestion:`BLD When the firm's marginal cost is greater than its average total cost, is the average total cost curve falling or rising? `IND `BLDQuestion:`BLD Why do the firm's marginal cost curve and average total cost curve intersect at minimum average total cost? ` Prob End """ let strLabSRCostProfitMaxAndSupplySpecs :String = """ `` Lab Specs // Cost function parameters: Derived from the min AVC point and min ATC point (see documentation) // minAVCq minAVC minATCq minATC 100 75 150 200 // 0: Cost function parameters // The parameters themselves are: 16071.42777 146.4285714 -1.428571429 0.007142857 // Cost function slider parameters -10000 10000 1000 0 // 1: Fixed cost -30 100 10 0 // 2: Linear cost -.3 1 .1 0 // 3: Quadratic cost -.002 .01 .001 0 // 4: Cubic cost // Scrollbar specs -1.0 1.0 .5 0.0 // 5: Long run cost factor 0 260 2 20 // 6: Quantity 0.00 300.00 5.00 240.00 // 7: Price -30 30 15 0 // 8: Demand shift 0 1000 10 500 // 9: Number of firms // Graphs q MC,_AVC,_ATC // 10: Cost curve axis names 0 0 250 300 // 11: Cost curve axis data range Q_(1,000s) P // 12: Market axis names // Demand function price coef // NB: The slope of the demand curve in P-Q space is the reciprocal // the x-axis of the market graph -300 // 13: Demand coefficient parameter // Market quantity scale factor 1000 // 14: Market quantity scale factor T // 15: Adjust text values `` Prob Specs ` ******** Problem 0 Start Screen 1 - Short Run: Profit Maximization // 0: Title ProfitMax // 1: Prob mode: CostCurve, ProfitMax, Market // Visibility specs N N N N // 2: Cost sliders: FixedC LinearVC QuadVC CubicVC B B N N N // 3: Input sliders: Quantity, Price, DemandShift, NbrOfFirms, EntryCostFactor T F // 4: Graphs: Cost Market T T T F // 5: MC AVC ATC Demand Curves: True, False N N N // 6: IS SS LS curves: Trace, Entire, None // IS: Individual firm supply curve 200 // 7: Initial equilibrium price ` Text Start // 8: Text `RED`BLDObjective:`BLD Illustrate that the firm's profit maximizing quantity is determined by the intersection of the marginal revenue and marginal cost curves, as long as the price exceeds minimum average variable cost. When the price falls short of minimum average variable cost, firm shuts down and produces nothing.`BLK Note that the price is $240.00. Using the firm's quantity scrollbar (the horizontal scrollbar) find the firm's profit maximizing quantity. `IND`BLDQuestion:`BLD Is the firm's marginal revenue less than, greater than, or equal to its marginal cost? `IND Using the price scrollbar (the vertical scrollbar) reduce the price to $180.00. Using the firm's quantity scrollbar (the horizontal scrollbar) find the firm's profit maximizing quantity. `IND`BLDQuestion:`BLD Is the firm's marginal revenue less than, greater than, or equal to its marginal cost? `IND Using the price scrollbar (the vertical scrollbar) reduce the price to $120.00. Using the firm's quantity scrollbar {the horizontal scrollbar) find the firm's profit maximizing quantity. `IND`BLDQuestion:`BLD Is the firm's marginal revenue less than, greater than, or equal to its marginal cost? `IND Using the price scrollbar (the vertical scrollbar) specify a price that is less than minimum average variable cost; for example, specify a price of $60.00. Using the firm's quantity scrollbar (the horizontal scrollbar) find the firm's profit maximizing quantity. `IND`BLDQuestion:`BLD When the price is less than minimum average variable cost, will the profit maximizing firm shut down and produce nothing? `IND `BLDQuestion:`BLD Why does the firm shuts down and produces nothing whenever the price is less than minimum average variable cost? `BLDGeneralize:`BLD In determining the firm's profit maximizing level of output in the short run, is the `0x2022 marginal cost curve important? If so, explain. `0x2022 average variable cost curve important? If so, explain. `0x2022 average total cost curve important? If so, explain. ` Prob End ` ******** Problem 1 Start Screen 2 - Short Run: Individual Firm's Supply Curve // 0: Title ProfitMax // 1: Prob mode: CostCurve, ProfitMax, Market // Visibility specs N N N N // 2: Cost sliders: FixedC LinearVC QuadVC CubicVC B B N N N // 3: Input sliders: Quantity, Price, DemandShift, NbrOfFirms, EntryCostFactor T F // 4: Graphs: Cost Market T T T F // 5: MC AVC ATC Demand Curves: True, False T N N // 6: IS SS LS curves: Trace, Entire, None // IS: Individual firm supply curve 200 // 7: Initial equilibrium price ` Text Start // 8: Text `RED`BLDObjective:`BLD Illustrate the relationship between the individual firm's short run supply curve to its marginal cost and average variable cost curves.`BLK `BLDDefinition:`BLD A firm's individual short run supply curve answers the following hypothetical questions: If the price were $____, how many units of output would the firm produce? Note that the price is $240.00. As before, use the firm's quantity scrollbar to find the firm's profit maximizing quantity. `IND`BLDQuestion:`BLD When the price is $240.00, how much output does the profit maximizing firm produce? `INDWe just found one point on the firm's individual supply curve. When the price is $240.00, the firm produces 160 units of output. `BLDQuestion:`BLD How do we find another point on the firm's individual supply curve? `BLDAnswer:`BLD Choose another price. Using the price scrollbar reduce the price to $180.00. Using the firm's quantity scrollbar find the firm's profit maximizing quantity. `IND`BLDQuestion:`BLD When the price is $180.00, how much does the profit maximizing firm produce? `INDWe just found a second point on the firm's individual supply curve. When the price is $180.00, the firm produces 144 units of output. The thick blue line appearing on the screen is the individual firm's short run supply curve between the two prices you specified, $240.00 and $180.00. Continue to trace out the curve by reducing the price to $120.00. Find the firm's profit maximizing quantity. We just found a third point on the firm's individual supply curve, the point corresponding to a price of $120.00. Using the price scrollbar reduce the price to $60.00. Now the price is less than minimum average variable cost. Find the firm's profit maximizing quantity at the $60.00 price. `IND`BLDQuestion:`BLD What happens to the firm's quantity supply and its supply curve when the price falls below minimum average variable cost. `IND `BLDGeneralize:`BLD How is the firm's short run individual supply curve related to its marginal cost and average variable cost curves? ` Prob End ` ******** Problem 2 Start Screen 3 - Short Run: Short Run Market Supply Curve // 0: Title ProfitMax // 1: Prob mode: CostCurve, ProfitMax, Market // Visibility specs N N N N // 2: Cost sliders: FixedC LinearVC QuadVC CubicVC N B N L N // 3: Input sliders: Quantity, Price, DemandShift, // NbrOfFirms, EntryCostFactor T T // 4: Graphs: Cost Market T T T F // 5: MC AVC ATC Demand Curves: True, False E T N // 6: IS SS LS curves: Trace, Entire, None // IS: Individual firm supply curve 200 // 7: Initial equilibrium price ` Text Start // 8: Text `RED`BLDObjective:`BLD Illustrate the relationship between the firms' individual supply curve and the short run market supply curve.`BLK `BLDDefinition:`BLD A short run market supply curve answers the following hypothetical questions: If the price were $____, how many units of output in total would firms supply in the short run? Note that initially the price is $240.00. `0x2022 How much output does the typical firm produce when the price is $240.00? `0x2022 How many firms are in the market? `0x2022 How many units of output are supplied in total when the price is $240.00? Using the price scrollbar set the price to $180.00. `0x2022 How much output does the typical firm produce when the price is $180.00? `0x2022 How many firms are in the market? `0x2022 How many units of output are supplied in total when the price is $180.00? Using the price scrollbar set the price to $120.00. `0x2022 How much output does the typical firm produce when the price is $120.00? `0x2022 How many firms are in the market? `0x2022 How many units of output are supplied in total when the price is $120.00? Using the price scrollbar set the price to $60.00. `0x2022 How much output does the typical firm produce when the price is $60.00? `0x2022 How many firms are in the market? `0x2022 How many units of output are supplied in total when the price is $60.00? `BLDGeneralize:`BLD How is the short run market supply curve to the firms' short run supply curves? ` Prob End ` ******** Problem 3 Start Screen 4 - Short Run: Shifts of the Short Run Market Supply Curve // 0: Title ProfitMax // 1: Prob mode: CostCurve, ProfitMax, Market // Visibility specs B N N N // 2: Cost sliders: FixedC LinearVC QuadVC CubicVC N B N L N // 3: Input sliders: Quantity, Price, DemandShift, // NbrOfFirms, EntryCostFactor T T // 4: Graphs: Cost Market T T T F // 5: Curves: MC AVC ATC Demand E E N // 6: IS SS LS curves: Trace, Entire, None // IS: Individual firm supply curve 200 // 7: Initial equilibrium price ` Text Start // 8: Text `RED`BLDObjective:`BLD Illustrate how a change in fixed costs affects the marginal cost curve, the average variable cost curve, the average total cost curve, and the short run market supply curve.`BLK Decrease fixed cost by $5,000 by using the fixed cost scrollbar at the top of the window. Does the change in fixed cost affect the `0x2022 marginal cost curve? `0x2022 average variable cost curve? `0x2022 average total cost curve? `0x2022 short run market supply curve? If the curve is affected explain how and why. If the curve is not affected explain why it is not. ` Prob End ` ******** Problem 4 Start Screen 5 - Short Run: Shifts of the Short Run Market Supply Curve // 0: Title ProfitMax // 1: Prob mode: CostCurve, ProfitMax, Market // Visibility specs N B N N // 2: Cost sliders: FixedC LinearVC QuadVC CubicVC N B N L N // 3: Input sliders: Quantity, Price, DemandShift, // NbrOfFirms, EntryCostFactor T T // 4: Graphs: Cost Market T T T F // 5: MC AVC ATC Demand Curves: True, False E E N // 6: IS SS LS curves: Trace, Entire, None // IS: Individual firm supply curve 200 // 7: Initial equilibrium price ` Text Start // 8: Text `RED`BLDObjective:`BLD Illustrate how a change in variable unit costs affects the marginal cost curve, the average variable cost curve, the average total cost curve, and the short run market supply curve.`BLK Decrease variable unit cost parameter by $20 by using the variable unit cost scrollbar. Does the change in variable unit cost affect the `0x2022 marginal cost curve? `0x2022 average variable cost curve? `0x2022 average total cost curve? `0x2022 short run market supply curve? If the curve is affected explain how and why. If the curve is not affected explain why it is not. ` Prob End """ let strLabSREquilibriumSpecs :String = """ `` Lab Specs // Cost function parameters: Derived from the min AVC point and min ATC point (see documentation) // minAVCq minAVC minATCq minATC 100 75 150 200 // 0: Cost function parameters // The parameters themselves are: 16071.42777 146.4285714 -1.428571429 0.007142857 // Cost function slider parameters -10000 10000 1000 0 // 1: Fixed cost -30 100 10 0 // 2: Linear cost -.3 1 .1 0 // 3: Quadratic cost -.002 .01 .001 0 // 4: Cubic cost // Scrollbar specs -1.0 1.0 .5 0.0 // 5: Long run cost factor 0 260 2 0 // 6: Quantity 0.00 300.00 5.00 130.00 // 7: Price -30 30 5 0 // 8: Demand shift 0 1000 10 500 // 9: Number of firms // Graphs q MC,_AVC,_ATC // 10: Cost curve axis names 0 0 250 300 // 11: Cost curve axis data range Q_(1,000s) P // 12: Market axis names // Demand function price coef // NB: The slope of the demand curve in P-Q space is the reciprocal // the x-axis of the market graph -300 // 13: Demand coefficient parameter // Market quantity scale factor 1000 // 14: Market quantity scale factor T // 15: Adjust text values `` Prob Specs ` ******** Problem 0 Start Screen 1 - Short Run: Short Run Equilibrium // 0: Title Market // 1: Prob mode: CostCurve, ProfitMax, Market // Visibility specs B N N N // 2: Cost sliders: FixedC LinearVC QuadVC CubicVC N N N N N // 3: Input sliders: Quantity, Price, DemandShift, NbrOfFirms, EntryCostFactor T T // 4: Graphs: Cost Market T T T T // 5: MC AVC ATC Demand Curves: True, False E E N // 6: IS SS LS curves: Trace, Entire, None // IS: Individual firm supply curve 200 // 7: Initial equilibrium price ` Text Start // 8: Text `RED`BLDObjective:`BLD Illustrate how a change in fixed costs affect the short run market supply curve and the short run equilibrium.`BLK Note that the equilibrium price in the short run equals $200.00. `BLDQuestions:`BLD `0x2022 What does the typical firm's average total cost equal? `0x2022 Is the typical firm's profit less than, greater than, or equal to 0? Decrease fixed cost by $5,000 by using the fixed cost scrollbar at the top of the window. `BLDQuestions:`BLD `0x2022 What does the equilibrium price in the short run equal? `0x2022 What does the typical firm's average total cost equal? `0x2022 Is the typical firm's profit now less than, greater than, or equal to 0? `BLDQuestion:`BLD Does a change in fixed costs affect the equilibrium in the short run? ` Prob End ` ******** Problem 1 Start Screen 2 - Short Run: Short Run Equilibrium // 0: Title Market // 1: Prob mode: CostCurve, ProfitMax, Market // Visibility specs N B N N // 2: Cost sliders: FixedC LinearVC QuadVC CubicVC N N N N N // 3: Input sliders: Quantity, Price, DemandShift, NbrOfFirms, EntryCostFactor T T // 4: Graphs: Cost Market T T T T // 5: MC AVC ATC Demand Curves: True, False E E N // 6: IS SS LS curves: Trace, Entire, None // IS: Individual firm supply curve 200 // 7: Initial equilibrium price ` Text Start // 8: Text `RED`BLDObjective:`BLD Illustrate how a change in variable unit costs affect the short run market supply curve and the short run equilibrium.`BLK Note that the equilibrium price in the short run equals $200.00. `BLDQuestions:`BLD `0x2022 What does the typical firm's average total cost equal? `0x2022 Is the typical firm's profit less than, greater than, or equal to 0? Decrease variable unit cost by $20 by using the variable unit cost scrollbar. `BLDQuestions:`BLD `0x2022 What does the equilibrium price in the short run equal? `0x2022 What does the typical firm's average total cost equal? `0x2022 Is the typical firm's profit now less than, greater than, or equal to 0? `BLDQuestion:`BLD Does a change in variable unit cost affect the equilibrium in the short run? ` Prob End ` ******** Problem 2 Start Screen 3 - Short Run: Short Run Equilibrium // 0: Title Market // 1: Prob mode: CostCurve, ProfitMax, Market // Visibility specs N N N N // 2: Cost sliders: FixedC LinearVC QuadVC CubicVC N N B N N // 3: Input sliders: Quantity, Price, DemandShift, NbrOfFirms, EntryCostFactor T T // 4: Graphs: Cost Market T T T T // 5: MC AVC ATC Demand Curves: True, False E E N // 6: IS SS LS curves: Trace, Entire, None // IS: Individual firm supply curve 200 // 7: Initial equilibrium price ` Text Start // 8: Text `RED`BLDObjective:`BLD Illustrate how a demand curve shift affects the short run supply curve and the short run equilibrium.`BLK Note that the equilibrium price in the short run equals $200.00. `BLDQuestions:`BLD `0x2022 What does the typical firm's average total cost equal? `0x2022 Is the typical firm's profit less than, greater than, or equal to 0? Using the Demand Curve Shift scrollbar, shift the demand curve to the right by 30 (30,000). `BLDQuestions:`BLD `0x2022 What does the equilibrium price in the short run equal? `0x2022 What does the typical firm's average total cost equal? `0x2022 Is the typical firm's profit now less than, greater than, or equal to 0? `BLDQuestion:`BLD Does a demand curve shift affect the equilibrium in the short run? ` Prob End """ let strLabLREquilibriumSpecs :String = """ `` Lab Specs // Cost function parameters: Derived from the min AVC point and min ATC point (see documentation) // minAVCq minAVC minATCq minATC 100 75 150 200 // 0: Cost function parameters // The parameters themselves are: 16071.42777 146.4285714 -1.428571429 0.007142857 // Cost function slider parameters -10000 10000 1000 0 // 1: Fixed cost -30 100 10 0 // 2: Linear cost -.3 1 .1 0 // 3: Quadratic cost -.002 .01 .001 0 // 4: Cubic cost // Scrollbar specs -1.0 1.0 .5 0.0 // 5: Long run cost factor 0 260 2 0 // 6: Quantity 0.00 300.00 5.00 130.00 // 7: Price -60 30 5 0 // 8: Demand shift 0 1000 10 500 // 9: Number of firms // Graphs q MC,_AVC,_ATC // 10: Cost curve axis names 0 0 250 300 // 11: Cost curve axis data range Q_(1,000s) P // 12: Market axis names // Demand function price coef // NB: The slope of the demand curve in P-Q space is the reciprocal // the x-axis of the market graph -300 // 13: Demand coefficient parameter // Market quantity scale factor 1000 // 14: Market quantity scale factor T // 15: Adjust text values `` Prob Specs ` ******** Problem 0 Start Screen 1 - Long-Run Dynamics: Constant Cost Industry // 0: Title Market // 1: Prob mode: CostCurve, ProfitMax, Market // Visibility specs N N N N // 2: Cost sliders: FixedC LinearVC QuadVC CubicVC N N B B L // 3: Input sliders: Quantity, Price, DemandShift, // NbrOfFirms, EntryCostFactor T T // 4: Graphs: Cost Market T T T T // 5: MC AVC ATC Demand Curves E E N // 6: IS SS LS curves: Trace, Entire, None // IS: Individual firm supply curve 200 // 7: Initial equilibrium price ` Text Start // 8: Text `RED`BLDObjective:`BLD Illustrate how a demand curve shift affects the long run equilibrium in a constant cost industry.`BLK `BLDQuestions:`BLD What does the `0x2022 equilibrium price equal? `0x2022 typical firm's average total cost equal? `0x2022 typical firm's profit equal? Use algebra to show that in general a firm's profit depends on the price and average total cost. Explain why this initial state of affairs is a long run equilibrium. More generally, explain why profit must equal 0 for a market to be in long run equilibrium. Next, use the Demand Curve Shift scrollbar to shift the demand curve to the right by 30 (30,000). `BLDQuestions:`BLD In the short run, what does the `0x2022 equilibrium price equal? `0x2022 typical firm's average total cost equal? `0x2022 typical firm's profit equal? `BLDQuestion:`BLD Why isn't this a long run equilibrium? Explain why firms now have an incentive to enter. Note that the entry cost effect equals 0. This means that entry and exit do not affect the costs of the typical firm; that is, we are analyzing a constant cost industry. Use the Number of Firms scrollbar to increase the number gradually. Note that as you do so the typical firm's cost curves remain stationary because this is a constant cost industry. `BLDQuestions:`BLD As you increase the number of firms what happens to the `0x2022 short run supply curve? `0x2022 equilibrium price? `0x2022 typical firm's profit? `BLDQuestions:`BLD Continue to increase the number of firms until a long run equilibrium is reestablished. What does the `0x2022 equilibrium price now equal? `0x2022 typical firm's average total cost equal? `0x2022 typical firm's profit equal? `BLDQuestion:`BLD How is this new long run equilibrium similar to the initial one and how does it differ? ` Prob End ` ******** Problem 1 Start Screen 2 - Long-Run Supply Curve: Constant Cost Industry // 0: Title Market // 1: Prob mode: CostCurve, ProfitMax, Market // Visibility specs N N N N // 2: Cost sliders: FixedC LinearVC QuadVC CubicVC N N B B L // 3: Input sliders: Quantity, Price, DemandShift, // NbrOfFirms, EntryCostFactor T T // 4: Graphs: Cost Market T T T T // 5: MC AVC ATC Demand Curves E E T // 6: IS SS LS curves: Trace, Entire, None // IS: Individual firm supply curve 200 // 7: Initial equilibrium price ` Text Start // 8: Text `RED`BLDObjective:`BLD Show that in a constant cost industry the long run supply curve is horizontal.`BLK `BLDDefinition:`BLD The long run supply curve depicts all the long run equilibria. Note that the entry cost effect equals 0. This means that entry and exit do not affect the costs of the typical firm; that is, we are analyzing a constant cost industry. Initially, the market is in long run equilibrium. Consequently, we have already found one point on the long run supply curve. `BLDQuestion:`BLD How can we find another point? `BLDAnswer:`BLD Shift the market demand curve and find the new long run equilibrium. Again, using the Demand Curve Shift scrollbar, shift the demand curve to the right by 30 (30,000). Increase the number of firms until a long run equilibrium is reestablished. We have now found a second point on the long run supply curve. To find a third point, shift the demand curve to the left by 30. Then reduce the number of firms until a long run equilibrium is reached. Continue to trace out the long run supply curve in this way. `BLDQuestion:`BLD In the long run, does the equilibrium price return to its initial equilibrium value? `BLDGeneralization:`BLD In a constant cost industry, is the long run supply curve upward sloping, downward sloping, or horizontal? ` Prob End ` ******** Problem 2 Start Screen 3 - Long-Run Dynamics: Increasing Cost Industry // 0: Title Market // 1: Prob mode: CostCurve, ProfitMax, Market // Visibility specs N N N N // 2: Cost sliders: FixedC LinearVC QuadVC CubicVC N N B B B // 3: Input sliders: Quantity, Price, DemandShift, // NbrOfFirms, EntryCostFactor T T // 4: Graphs: Cost Market T T T T // 5: MC AVC ATC Demand Curves E E N // 6: IS SS LS curves: Trace, Entire, None // IS: Individual firm supply curve 200 // 7: Initial equilibrium price ` Text Start // 8: Text `RED`BLDObjective:`BLD Illustrate how a demand curve shift affects the long run equilibrium in an increasing cost industry.`BLK To analyze an increasing cost industry us the Entry Cost Effect scrollbar to increase the entry cost to 1.0. The entry of new firms will cause the typical firm's costs to rise, exit causes costs to fall. `BLDQuestions:`BLD What does the `0x2022 equilibrium price equal? `0x2022 typical firm's average total cost equal? `0x2022 typical firm's profit equal? Use algebra to show that in general a firm's profit depends on the price and average total cost. Explain why this initial state of affairs is a long run equilibrium. More generally, explain why profit must equal 0 for a market to be in long run equilibrium. Next, use the Demand Curve Shift scrollbar to shift the demand curve to the right by 30 (30,000). `BLDQuestions:`BLD In the short run, what does the `0x2022 equilibrium price equal? `0x2022 typical firm's average total cost equal? `0x2022 typical firm's profit equal? `BLDQuestion:`BLD Why isn't this a long run equilibrium. Explain why firms now have an incentive to enter. Use the Number of Firms scrollbar to increase the number gradually. Note that as you do so the typical firm's cost curves do not remain stationary; instead they rise because this is an increasing cost industry. First, focus on the market. `BLDQuestions:`BLD As you increase the number of firms what happens to the `0x2022 short run supply curve? `0x2022 equilibrium price? Next, focus on the typical firm. `BLDQuestions:`BLD As you increase the number of firms what happens to the typical firm's `0x2022 average total cost curve. `0x2022 profit? NB: As firms enter `0x2022 the equilibrium price falls. `0x2022 the typical firm's average total cost curve rises. Continue to increase the number of firms until a long run equilibrium is reestablished. `BLDQuestions:`BLD What does the `0x2022 equilibrium price now equal? `0x2022 typical firm's average total cost equal? `0x2022 typical firm's profit equal? `BLDQuestion:`BLD How is this new long run equilibrium similar to the initial one and how does it differ? ` Prob End ` ******** Problem 3 Start Screen 4 - Long-Run Supply Curve: Increasing Cost Industry // 0: Title Market // 1: Prob mode: CostCurve, ProfitMax, Market // Visibility specs N N N N // 2: Cost sliders: FixedC LinearVC QuadVC CubicVC N N B B B // 3: Input sliders: Quantity, Price, DemandShift, // NbrOfFirms, EntryCostFactor T T // 4: Graphs: Cost Market T T T T // 5: MC AVC ATC Demand Curves E E T // 6: IS SS LS curves: Trace, Entire, None // IS: Individual firm supply curve 200 // 7: Initial equilibrium price ` Text Start // 8: Text `RED`BLDObjective:`BLD Show that in an increasing cost industry the long run supply curve is upward sloping.`BLK To analyze an increasing cost industry us the Entry Cost Effect scrollbar to increase the entry cost to 1.0. The entry of new firms will cause the typical firm's costs to rise, exit causes costs to fall. `BLDDefinition:`BLD The long run supply curve depicts all the long run equilibria. Initially, the market is in long run equilibrium. Consequently, we have already found one point on the long run supply curve. `BLDQuestion:`BLD How can we find another point? `BLDAnswer:`BLD Shift the market demand curve and find the new long run equilibrium. Again, using the Demand Curve Shift scrollbar, shift the demand curve to the right by 30 (30,000). Increase the number of firms until a long run equilibrium is reestablished. We have now found a second point on the long run supply curve. To find a third point, shift the demand curve to the left by 30. Then reduce the number of firms until a long run equilibrium is reached. Continue to trace out the long run supply curve in this way. `BLDGeneralization:`BLD In an increasing cost industry, is the long run supply curve upward sloping, downward sloping, or horizontal? ` Prob End """ }