Suppose there are 1,000 hot pretzel stands operating in New York City. Each stand has the usual U-shaped average-total-cost curve. The market demand curve for pretzels slopes downward, and the market for pretzels is in long-run competitive equilibrium.

a. Draw the current equilibrium, using graphs for the entire market and for an individual pretzel stand.

b. The city decides to restrict the number of pretzel-stand licenses, reducing the number of stands to only