Microeconomics.

Microeconomics

I . a . The short run equilibrium is achieved under short term conditions In the short run , firms may only vary some of their inputs of production . Additionally , the population of firms in the industry is fixed in the short run - no industries enter or exit the market . In the long run , firms would have been able to alter all of their production inputs . Additionally , the long run scenario also allows for the entry and exit of firms in the market

b . To understand the upward slope of the supply curve , it

is important to think like a supplier . As a firm which wants maximum revenues , you would want your product which is selling at high quantities to have a higher price . Similarly , low movement products would also tend to be marked down in price

c . Microeconomics tells us that firms in competitive markets will earn zero profit in the long run . While their economic profit is zero , their accounting profit is positive . The accounting profit only measures explicit costs while economists also account for implicit costs . For example , Joe the Plumber may invest 250 ,000 into his plumbing services firm in a competitive market which earns a decent profit every year However , the economist will deduct from that profit the opportunity costs of his choice of investing that 250 ,000 into his plumbing business as opposed to other possible investment opportunities . In the long run , the opportunity costs of the sunk 250 ,000 plus the operating costs of the...