Scenario: The figure below shows the supply and the demand for a good (left) and the cost curves of an individual firm in this market (right). Initially, all firms in this market have identical cost curves MC₁ and ATC₁, and the market is in equilibrium at point A. Subsequently, a new production technology has been developed for this product. Some of the existing firms as well as some new firms have adopted the new technology, and their cost curves are MC₂ and ATC₂.

-Refer to the figure above.At A,the market is ________.

Question

Scenario: The figure below shows the supply and the demand for a good (left) and the cost curves of an individual firm in this market (right). Initially, all firms in this market have identical cost curves MC₁ and ATC₁, and the market is in equilibrium at point A. Subsequently, a new production technology has been developed for this product. Some of the existing firms as well as some new firms have adopted the new technology, and their cost curves are MC₂ and ATC₂.
 
-Refer to the figure above.At A,the market is ________.

Quizplus · Accepted Answer

At point A, the market is in a short-run equilibrium where firms are earning positive economic profits. This is because the price is above the average total cost (ATC), allowing firms to earn more than their break-even point, which is characteristic of a short-run scenario where not all firms have adjusted to these profit opportunities.

Scenario: the Figure Below Shows the Supply and the Demand