1)Perfect Competition (15 Points): You are an analyst for Knockoff Princess Dolls (KPD), one of many firms in the counterfeit toy market.

Market demand for these dolls is: Qdemand = 6,500 - 250P

There are presently 25 identical firms in this market. Each firm faces total costs of TC = 360 + 2q + 0.025q² and MC = 2 + 0.05q

a)Show that each firm's supply curve is: q^s = -40 + 20P

b)Find the market equilibrium price and quantity.

c)Is this the long-run equilibrium? Prove it.

d)Draw side-by-side graphs (one for the market, one for the firm) that illustrate this short-run equilibrium. Point out the equilibrium price and quantity, as well as profits

e)Assume that there are many potential entrants with identical costs. Find the long-run equilibrium price and number of firms.

f)Suppose that fixed costs rise from 360 to 640. Using intuition, how would you expect the long-run number of firms to change?