1. Complete the following:
   1. Draw a graph for a perfectly competitive firm in the short run, illustrating both of the following two situations (include ATC, AVC, MC & MR):
      • An economic profit less than zero. (1 mark)
      • The firm is able to cover all its fixed costs. (1 mark)

1. Should the firm shut down in the short run? Explain. (2 marks)
2. Describe the transition from the short run to the long run in this perfectly competitive industry. How do you know when the transition is complete? (2 marks)
3. Draw the long run equilibrium graph for this firm. (2 marks)