1) The following graphs represent the cost curves of a single producer of wheat and the short-term supply and demand in the market for wheat. Individual Firm Market MIC ATC LOSS (ATC > Price) Pe Equilibrium quantity Equilibrium quantity A) Plot on the graph the equilibrium quantity in the market and the quantity produced by an individual firm. B) Plot on the graph the profit of a single firm. Does it have profit or losses? the firm is having losses. The total cost per unit (Average total cost ATC) is higher eamed than the marginal revenue earned per unit at Pe. C) Is this market in its long-term equilibrium? why? The firm is in the short run because it is facing short run losses. The current short run losses are caused by increased number of competition in the market which are supplying more goods hence reducing the equilibrium price. The price falls below the average total cost that each firm is experiencing. Therefore firms are making losses and this is the feature of the short run. C) show in the graph the long-run equilibrium and explain the process by which it is achieved. D) Suppose the wheat market is in the long-run equilibrium. Suddenly wheat becomes more popular and its demand increases. Draw a new set of graphs (for individual firm and the market) showing the initial long-run equilibrium, the new short-run equilibrium after the demand increase, and the final long-run equilibrium after the demand increase. Briefly explain the process