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Question: Suppose that the shovel industry is in long-run equilibrium, and all firms are identical (even po...Question: Suppose that the shovel industry is in long-run equilibrium, and all firms are identical (even po...

Show transcribed image text Suppose that the shovel industry is in long-run equilibrium, and all firms are identical (even potential entrants) and earning zero profit. In the short run, the number of machines available to produce shovels is fixed, so labor is the only variable input. Also, each year firms must pay the government a fee in order to continue operations. In the sh run, these fees are considered sunk costs once paid, but in the long run, they are considered real economic costs. The following graphs show the demand and short-run supply of shovels and the cost curves for an individual firm i the industry in the long run. Individual Firm in the Long Run Short-Run Market COST (Dollars per shovel) PRICE (Dollars per shovel) MC Demand Supply AC QUANTITY (Shovels) OUTPUT (Shovels) Suppose the demand for shovels falls because of changing weather conditions going forward. Complete the table below by indicating how this affects the costs and industry conditions in the short run and the long run.

Suppose that the shovel industry is in long-run equilibrium, and all firms are identical (even potential entrants) and earning zero profit. In the short run, the number of machines available to produce shovels is fixed, so labor is the only variable input. Also, each year firms must pay the government a fee in order to continue operations. In the sh run, these fees are considered sunk costs once paid, but in the long run, they are considered real economic costs. The following graphs show the demand and short-run supply of shovels and the cost curves for an individual firm i the industry in the long run. Individual Firm in the Long Run Short-Run Market COST (Dollars per shovel) PRICE (Dollars per shovel) MC Demand Supply AC QUANTITY (Shovels) OUTPUT (Shovels) Suppose the demand for shovels falls because of changing weather conditions going forward. Complete the table below by indicating how this affects the costs and industry conditions in the short run and the long run.