Step 1: Read the following scenario. Superconductor technology is becoming a wid

Question

Step 1: Read the following scenario. Superconductor technology is becoming a widespread and indispensible component of the machines we use today. Superconductors can be found in everything from transportation to electronic signal transmission. Due to our increasing reliance on technology, the demand for superconductors has skyrocketed. As a result, production has also increased exponentially, which has greatly reduced the cost per unit.

Step 2: Use the scenario to answer the following questions. In a one-page (250-word) document, answer the following questions using the information provided in the scenario in Step 1: Explain why the price of superconductors has diminished in the short run. How does a superconductor manufacturing company's output correlate with the quantity of labor in the short run? Calculate a long-run average cost curve for superconductors. Explain how the producer's marginal revenue, the marginal cost of producing superconductors, economic profit on superconductor technology, and the producer's economic profit have changed.

Explanation / Answer

as the demand has increased a lot marginal cost of producing has decreased. so price has been diminished. further to attract large base of customers price has to be minimum. as there is huge demand quantity of labor and machine should be higher in short run. average cost curve should be diminishing because of huge fixed cost and marginal variable cost in the long run. marginal revenue should be increasing slowly because of low price of output of if P=MC then MR should remain almost constant. producer economic profit is normal but not very high. as the technology is increasing the price should remain lower in long run and may be further lower.

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