Assume that the kitty litter industry is perfectly competitive and is presently in long-run equilibrium:

a. Draw diagrams for both the market and a typical firm, showing equilibrium price and quantity for the market, and MC, ATC, AVC, MR, and the demand curve for the firm.

b. Your friend has always had a passion to get into the kitty litter business. If the market is in long run equilibrium, will it be profitable for him to jump in headfirst (so to speak)? Why or why not?

c. Suppose people begin to prefer dogs as pets, and cat ownership declines. Show on your diagrams from part (a) what happens in the industry and the firm in the long run, assuming that this is a constant cost industry.