PLEASE ANSWER WITH GRAPH: Suppose that an industry is initially at a long-run competitive equilibrium. Originally, firms in the industry had very low fixed costs, but due to a new law, firms' fixed costs increased significantly. Throughout all these changes, the industry remains competitive. Graphically show how this new law changes the industry in both the short run and long run. To receive full credit, you must: Correctly show how the law changed the MC, AVC, ATC, LRS, Demand and Short - Run Supply Curves (if at all). Correctly show profits at the firm level immediately after the new law is put in place and in the long run. Correctly show how the market will adjust to the new long-run competitive equilibrium. Clearly show how the long-run equilibrium market quantity and market price

Based on your answers to the WipeOut Ski Company in Exercise 7.3, now imagine a situation where the firm produces a quantity of 5 units that it sells for a price of 25 each. What will be the companys profits or losses? How can you tell at a glance whether the company is making or losing money at this price by looking at average cost? At the given quantity and price, is the marginal unit produced adding to profits?

How would an improvement in technology, like the high-efficiency gas turbines or Pirelli tire plant, affect me lung-nm average cost curve of a firm? Can you draw the old curve and the new one on the same axes? How might such an improvement affect other firms in the industry?

Why will losses for firms in a perfectly competitive industry tend to vanish in the long run?

What are the four basic assumptions of perfect competition? Explain in words what they imply for a perfectly competitive firm.

Will a perfectly competitive market display productive efficiency? Why or why not?

According to the accompanying table, what quantity of output should the firm produce? Explain your answer.

Since a perfectly competitive firm can sell as much as it wishes at the market price, why can the firm not simply increase its profits by selling an extremely high quantity?

Why will firms in most markets be located at or close to the bottom of the long-run avenge cost me?

What two rules does a perfectly competitive firm apply to determine its profit-maximizing quantity of output?