e. Due to the epidemic, quantity demanded drops by 1000 units at each price level. in the short run, will a typical firm shut down? Explain with calculation. Draw proper figures to illustrate the...

Extracted text: e. Due to the epidemic, quantity demanded drops by 1000 units at each price level. in the short run, will a typical firm shut down? Explain with calculation. Draw proper figures to illustrate the situation of the market and a typical firm. Label price levels, output quantities of a firm, and market equilibrium quantities. Due to epidemic, the demand becomes perfectly elastic at the market price level in (e). To save the industry, here are a few opinions: Adam: shutdown infected community and enforce strict quarantine policy. Brian: invent new vaccine and achieve herd immunity in the long run. Clair: manage the expectation of people and make demand less elastic. Who is correct? Explain with calculation.


Extracted text: Assume an industry consists of identical firms in a typical perfect competitive Q4. market. The equation for market demand is QD = 10,000 –P %3D In the beginning, the market is in long run equilibrium, and each firm has the following cost equations: TC = 25 + q and MC = 29 %3D