The last of California’s operating gold mines closed after World War II because mining had become unprofitable when the price of gold was $34.71 an ounce (about $446 in current dollars). However, in 2012, the price of gold approached historic highs, hovering around $1,700 an ounce. Consequently, in 2012 and 2013, several large-scale hard rock gold mining operations reopened for the first time in more than half a century. 

a. Show in a figure what this information implies about the shape of the gold extraction cost function.
b. Use the cost function you drew in part a to show how an increase in the market price of gold affects the amount of gold that a competitive firm extracts. Show the change in the firm’s equilibrium profit.