A Wall Street Journal headline states: “A Nation of Snackers Snubs Old Favorite: The Beloved Cookie.”

As U.S. consumers adopted more carbohydrate-conscious diets, the number of cookie boxes sold declined 5.4 percent that year, the third consecutive year of decline.

a. Assuming the cookie industry is perfectly competitive, demonstrate using market supply and demand curves the effect of this decline in demand on equilibrium price and quantity in the short run.

b. Assuming a cookie firm was in equilibrium before the change in demand, and it is a constant-cost industry, demonstrate the effect of the decline on equilibrium price for an individual cookie firm in the short run.

c. How might your answer to a change if you are considering the long run?