3.6 The following graph shows the supply curve and three different demand curves for a perfectly competitive industry. The table represents cost data for a representative firm in the industry.

3.7 For each of the three scenarios in the previous question (P* = 25, P* = 15, and P* = 10), explain the long-run incentives for each representative firm in the industry. Also explain what should happen to the size of the industry as a whole?

3.8 On the following graph for a purely competitive industry, Scale 1 represents the short-run production for a representative firm. Explain what is currently happening with firms in this industry in the short run and what will likely happen in the long run.