a. ( 3 points) Sketch typical marginal cost (MC), average variable cost (AVC) and average total cost curves (ATC) for a firm. b. (5 points) Draw a supply and demand graph for a perfectly competitive constant cost industry, showing both long run and short run supply curves intersecting demand at a long run equilibrium. Label the equilibrium price P0 and equilibrium quantity Q0. c. (4 points) In the graph you drew for (a), draw the demand and marginal revenue curves for a firm in perfect competition, assuming that the firm is in long run equilibrium at the market price P0. Label the quantity the profit-maximizing firm would choose q0. What are the economic profits of the firm in long run equilibrium? d. (3 points) Explain how the cost curves for individual firms are related to the short run supply curve for the firm and to the short run supply curve for the entire industry. e. ( 1 point) How is the long run supply curve for a constant cost industry related to the cost curves for a representative firm. f. (3 points) In the graph you drew for (b) show the short run effects of a decrease in demand. Label the new short run equilibrium price P1 and equilibrium quantity Q1. [For the remaining parts of this question, you do not need to do any more graphical analysis. Just give a verbal explanation of what is happening to the firms in this industry.] 9, (1 point) At the new short run equilibrium price p1 is the firm earning economic profits or losses? h. ( 5 points) In the long run what will happen to the number of firms in the industry, the short run supply curve for the industry, the equilibrium price and quantity, and the economic profits of firms? a. ( 3 points) Sketch typical marginal cost (MC), average variable cost (AVC) and average total cost curves (ATC) for a firm. b. (5 points) Draw a supply and demand graph for a perfectly competitive constant cost industry, showing both long run and short run supply curves intersecting demand at a long run equilibrium. Label the equilibrium price P0 and equilibrium quantity Q0. c. (4 points) In the graph you drew for (a), draw the demand and marginal revenue curves for a firm in perfect competition, assuming that the firm is in long run equilibrium at the market price P0. Label the quantity the profit-maximizing firm would choose q0. What are the economic profits of the firm in long run equilibrium? d. (3 points) Explain how the cost curves for individual firms are related to the short run supply curve for the firm and to the short run supply curve for the entire industry. e. ( 1 point) How is the long run supply curve for a constant cost industry related to the cost curves for a representative firm. f. (3 points) In the graph you drew for (b) show the short run effects of a decrease in demand. Label the new short run equilibrium price P1 and equilibrium quantity Q1. [For the remaining parts of this question, you do not need to do any more graphical analysis. Just give a verbal explanation of what is happening to the firms in this industry.] 9, (1 point) At the new short run equilibrium price p1 is the firm earning economic profits or losses? h. ( 5 points) In the long run what will happen to the number of firms in the industry, the short run supply curve for the industry, the equilibrium price and quantity, and the economic profits of firms