The Depicting Graphs - Assignment Example

The decrease in the cost of production will increase the profit margins of the company. Hence, it will be willing to supply more t-shirts. This is depicted by the outward shift of the supply curve from S1 to S2. Therefore, the increased quantity supplied decreases the shortage in the market.The curve of Marginal Revenue depicts the extra revenue that is earned from selling an extra unit of output. It declines linearly as the output increases. The curve of Marginal cost shows the extra cost that is incurred from producing an extra unit of output.

It is the U-shaped curve that first declines reaches a minimum cost and then rises as the output increases. The curve of Average Cost portrays the mean cost of producing a certain level of output. It declines sharply at first, reaches a minimum average cost and then steadily rises as the output produced is increased. The demand curve depicts the quantity demanded at different prices. It is a downward sloping curve. As the price decreases, the quantity demanded increases.I believe that the firm will not face severe competition for a long time as barriers to entry are high in this monopolistic market structure.

This will guarantee the firm sure profits in the long run as well.One of the first impacts will be the increased price of the imported goods and services. This will increase the cost of these commodities in the UK market. As well as the producers will increase their cost to cover their rise in price in their imported raw materials. Therefore, this will lead to cost-push inflation in the UK market. On the other hand, the depreciation will boost the UK exports and lead to increase in their demand.

All in all, the increases exports and the reduced imports will lead to a growth in the GDP of the country.At the same time, the other European markets will face tough competition from the low priced UK exports.