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Business, 07.04.2020 19:41 blognero

According to an article by Sarah Witten published this May 18, 2018 on CNBC. com, birth rates in the U. S. have been falling since 2008, with the result that producers of baby diapers are experiencing an extended period of declining demand.

Assume that the baby diaper industry is perfectly competitive and in long run equilibrium in 2007. Assume each firm has a single diaper plant, and draw a graph of the market and of a representative firm. What characterizes this equilibrium?
Show the effects of the subsequent decline in the birth rate on price, quantities, and profits. What will the typical firm do in the short run?
Assuming a firm continues to operate its plant in the short run, what will it do in the long run? (You do not have to graph the long run.)
One strategy adopted by baby diaper producers is to switch plants from producing baby diapers to adult diapers, because the aging baby boom generation in the U. S. is rapidly increasing the percentage of people in the "over 65 years of age" category. Assume the market for adult diapers is perfectly competitive, draw it initially in long run equilibrium, and then show how the aging baby boom generation affects price, quantities, and profits.
Using graphs to illustrate your answer, explain what will happen to price, output, and profits in the adult diaper market in the long run. Include in your response any assumptions you make when predicting the level of long run price.

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According to an article by Sarah Witten published this May 18, 2018 on CNBC. com, birth rates in the...

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