Price B с A Cannot be determined C B The graph above depicts the demand, short-run industry supply curve and the long- run industry supply curve. Which line represents the long-run industry supply curve? Quantity

50 MC ATC 40 30 MR 10 10 20 30 40 Quantity (per day) The figure above shows a perfectly competitive firm. The firm is operating; that is, the firm has not shut down. a) What is the output level should the firm produce to maximize the profit? b) What is the price does the firm charge at this output level? Price and costs (dollars) 20

ATC MC Z AVC V. W $13 $10 T $7 $4 N 5 7 9 10 12 144 The graph above shows cost curves of a firm in a competitive market. Several points are marked on the graph to allow tracing curves. Some of them can also be used to indicate various prices. Refer to the graph to answer the following questions: 1. The short-run supply of the firm can be traced by connecting points 2. If the market price is $4 then in the short-run the firm would supply units. At this price the firm would 3. If the market price is $10 then in the short-run the firm would supply units. At this price the firm would 4. If the market price is $7 then in the short-run the firm would supply units. At this price the firm would 5. In the short run, the firm is better off continuing to operate (i.e. Q>0) despite losses if the price is in the interval above and below %24

(J) Canadian red wheat is a normal good, in a perfectly competitive market which is in long run equilibrium. There occurs a boon in the economy and income rises. What effect does this have on short run equilibrium price and equilibrium quantity? Draw a short run industry graph showing the change described above. Remember to label every curve, label your axes, and demonstrate the resulting changes in the axes.