Suppose Bicycles Are Produced by a Competitive Constant-Cost Industry,which Is

question 19

Essay

Suppose bicycles are produced by a competitive constant-cost industry,which is initially in a long-run equilibrium.For each of the following situations,design a supply-demand diagram that shows how market price and quantity will be affected in both the short run and the long run.In your diagrams,show the short-run supply,long-run supply,and demand curves,along with any shifts in these curves.Label the initial long-run equilibrium E₀,the new short-run equilibrium E₁,and the new long-run equilibrium E₂.

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Definitions:

FMLA

The Family and Medical Leave Act, a U.S. federal law that provides eligible employees with unpaid, job-protected leave for certain family and medical reasons.

Employers

Entities that hire individuals to perform various jobs in exchange for salary or wages.

Employees

Individuals who are hired by a company to perform tasks in exchange for compensation, under the direction and control of the employer.

COBRA

A federal law in the United States that allows for the temporary continuation of health coverage at group rates for employees and their families under certain circumstances such as job loss.