Problem 1: A Tax 8: Perfect Competition [11 points] Suppose that we exist in a perfectlyl competitive industry; and we begin in longrun equilibrium. The cost curves are as below. C! E! Now suppose that the government also implements a $10 excise {per unit} tax on the producers in this market. 1] What will happen to shortrun profits for rms in this market? Draw what happens to the marltet price and show what happens to firm profits using suppli,l and demand and the cost curves similar to the figures above. [hint: in the short-run, you will want to use the shortrun supply curve, not the longrun suppli,l curve] [3 points] 2] What would need to happen for rms to begin to exit in the shortrun? Show this iilisuallliI using using supply and demand and the cost curves. Show an example where firms would not be exiting on the short-run. [3 points] 3] What will happen to the market price and the number of firms in the long-run as a result of this tax? Show this trisualli,l using using supply and demand and the cost curves. [3 points] 4] Who ends up paying the incidence ofthis tax in the longrun lbuyers or sellers]? [2 points]