Please solve all 3 questions till 1.00 pm

1. Consider the perfectly competitive cherries industry. In recent years there has been an increase in demand worldwide caused by the growing demand from Asia Pacific and more people realizing the importance of fresh fruits in diet. Please discuss the effects on the cherries market. Particularly, what are the effects on the cherries market in the short run? What is the typical firms' short-run response? How do this industry and the typical firm adjust to this changing market condition in the long run? Please draw the graphs for the whole industry and the typical firm and explain in words. (20 points) 2. "A monopolistically competitive market in which there are no entry barriers will have the identical long-run equilibrium as if the market were perfectly competitive." Is this statement correct? Explain. (10 points) 3. Larry, Curly, and Moe run the only saloon in town. Larry wants to sell as many drinks as possible without losing money. Curly wants the saloon to bring in as much revenue as possible. Moe wants to make the largest possible profits. Using a single diagram of the saloon's demand curve and its cost curves, show the price and quantity combinations favored by each of the three partners. Explain. (20 points)