What condition would have to be met for a firm to shut down in the short-run?

Using the model of the firm in perfect competition answer the following questions regarding the nat Show more Using the model of the firm in perfect competition answer the following questions regarding the natural gas industry: Given the impact of fracking would you expect the profits of natural gas producing firms to increase or decrease in the short-run? Why? Would these firms produce more or less natural gas? Why? Please use the short-run model of a firm in perfect competition to explain your answer. Since the development and incorporation of fracking the prices of natural gas have decreased dramatically and evidence suggests that this price will remain low for a number of years to come. Would this suggest that the industry is subject to long-term economies or diseconomies of scale? Would this be consistent for a capital intensive industry? Please explain. What condition would have to be met for a firm to shut down in the short-run? Leave the industry in the long-run? If the production of natural gas is a highly competitive industry would firms be able to earn economic profits in the long-run? What about accounting profits? See the following articles/web pages for additional information regarding the production and prices of natural gas: The Economist An unconventional glut Mar. 11 th 2012 http://www.economist.com/node/15661889 Sahu Subrat and Parekh Kunal DETERMINANTS OF ECONOMIES OF SCALE AND THEIR INFLUENCE ON THE OIL & GAS SERVICES: A DISCUSSION Review of Integrative Business & Economics Vol 1 page 246 259 http://sibresearch.org/uploads/2/7/9/9/2799227/riber2012-207_246-259.pdf For data regarding production and prices of natural gas consult the following information from the EIA: http://www.eia.gov/dnav/ng/hist/n9190us3m.htm and http://www.eia.gov/forecasts/steo/report/natgas.cfm Show less

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