1. Short-run supply and long-run equilibrium Consider the competitive market for titanium. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. 051015202530354045501009080706050403020100COSTS (Dollars per pound)QUANTITY (Thousands of pounds)MCATCAVC The following diagram shows the market demand for titanium. Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 20 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 30 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 40 firms. Supply (20 firms)Supply (30 firms)Supply (40 firms)01252503755006257508751000112512501009080706050403020100PRICE (Dollars per pound)QUANTITY (Thousands of pounds)Demand If there were 20 firms in this market, the short-run equilibrium price of titanium would be per pound. At that price, firms in this industry would . Therefore, in the long run, firms would the titanium market. Because you know that competitive firms earn economic profit in the long run, you know the long-run equilibrium price must be per pound. From the graph, you can see that this means there will be firms operating in the titanium industry in long-run equilibrium. True or False: Each of the firms operating in this industry in the long run earns positive accounting profit. True False