Question 1

The setting and assumptions described in the three bullets below will be applicable to Questions 1 through 3.

The market for calculators is a perfectly competitive industry facing typical U-shaped ATC, AVC, and MC cost curves. Demand is linear and has a downward slope. The industry is filled with many homogeneous firms. At the time associated with Question 1, firms in the industry are earning positive economic profits.

Using a side-by-side graph that depicts both the market (on the left) and a representative firm (on the right), graphically depict this original short run equilibrium (SRE), showing (a) P (price), (b) Q (market output), (c) q (representative firm's output), and (d) (representative firm's profit).

Clearly label and explain your graph, as necessary.

Question 2

Continue your analysis of the calculator industry from Question 1.

Recall the assumptions:

• The market for calculators is a perfectly competitive industry facing typical U-shaped ATC, AVC, and MC cost curves.
• Demand is linear and has a downward slope.
• The industry is filled with many homogeneous firms.

Using a side-by-side graph that depicts both the market (on the left) and a representative firm (on the right), graphically depict what will happen to (a) P (price), (b) Q (market output), (c) q (representative firm's output), and (d) (representative firm's profit) when the market moves from the original short run equilibrium (SRE) with positive profits you depicted in Question 1 to a new long run equilibrium (LRE).

Question 3

On a graph for a representative firm in a perfectly competitive industry, depict the three cost curves AVC, ATC, and MC (assume typical U-shaped cost curves).

Now assume the market price, P, is such that it intersects the upward-sloping portion of MC above ATC. Graphically depict the short-run equilibrium q (representative firm's output) and (representative firm's profit) under this price scenario.

Please upload an MS Word, Adobe PDF, or a picture file (JPEG, TIFF, PNG, BMP) with your graph as your response to this question. Please limit your file size to no more than 5 MBs.

QUESTION 4

On a graph for a representative firm in a perfectly competitive industry, depict the three cost curves AVC, ATC, and MC (assume typical U-shaped cost curves).

Now assume the market price, P, is such that it intersects the upward sloping portion of MC below AVC. Graphically depict the short-run equilibrium q (representative firm's output) under this price scenario.

Please upload an MS Word, Adobe PDF, or a picture file (JPEG, TIFF, PNG, BMP) with your graph as your response to this question. Please limit your file size to no more than 5 MBs.

note: please answer all questions, include all 4 graphs with explaination. Thank you!