Please answer all parts.

1} Suppose there is arm operating in aperfectly competitive market. This rm has identical costs to all other rms in this market. Their current shororun average cost function and marginal cost function are given by the following two equations: 45:], 000 1: M0 = 109' AC=5y+ I have included Figure 1 for your reference. Note that it is not to scale. a) [5 marks) If the price in the market was currently $30,000. determine the amount of output that this rm would produce, and the prot that it would earn. b} (6 marks) Assuming that these shororun cost curves were those that were asso ciated with the minimum of the longrun average cost curve. Describe what the longrun equilibrium looks like by answering the following quaintions: a What would be the longrun equilibrium price in this market? a How much would this rm produce? up How much prots would it earn? - 1Would there be more rms or fewer rms in the industry after this move to the longrun equilibrium was complete? c) (4 marks] Suppose instead that rms were currently operating on the increasing returns to scale portion of their longrun average cost curve, rather then at the minimum. How would your answer to the rst two questions in part b change as a result of this assumption? Note that you do not need to provide any numbers here, just give an indication of how price and quantity would change as a resuit. Figure 1: MC Costs/Price Price $30,000 AC AVC $3,000 y