1) Suppose the production technology worsens so that the firm's average cost increase to ATC3. At the same time, the market price declined so that marginal revenues also fall to MR2. What is the new qmax? Calculate the profit or loss for the typical firm.2) Is this industry a long-run or short-run equilibrium?

Consider a competitive industry with a number of identical firms that produce very expensive Blu-ray players. The graphs below show the industry demand and supply curves as well as the cost curves of a typical individual firm in the industry. Price and costs are in dollars per Blu-ray, and quantity is number of Blu-rays. Industry Typical Firm ATC3 MC SPI ATC2 MR1 400 400 - - - - .MRz 200 400 600 800 1000 1200 4 6 8 10 12 14