1.The perfectly competitive cauliower market has identical farms in a constant cost industry. Assu me typical cost cu ores and downward sloping Market Demand. The economy is currently in short run and long run equilibrium. Each farmer produces cauliower using land, labour, and materials [seeds, fertilizer, etc.}I. Dnly land is xed in the short run, labour and materials are variable inputs. Assume the price of land neyer changes. 1a] In 203D something changes in the economy. Two things happen in the short run as a result [1] the market price for cauliower decreases and [2] farm profits increase. [Draw the graph and label it] Claim: Both short-run results can be explained by a decrease in market demand. Agree, Disagree or It Depends? Explain your reasoning. For full marks, make sure to explain what could explain the results. 'I.:|_._' I'I:'\\-l 1b]: By 2039 the economy has returned to both long run and short run equilibrium. In 204-0 weather patterns result in a one-time, larger than expected ha Nest of cauliower. This is not expected to eyer happen again. Describe the short run and long run effects of this on [1] market price, [2} market quantity, [3} rm quantity and [43 number of rms. Explain your reasoning. [Draw the graph and la bel it] 2. The market for gas is perfectly competitive with identical firms. Market demand is downward sloping. Each firm has the typical cost curve shapes. The market is currently in long-run and short-run equilibrium. To help themselves in the upcoming elections, the government imposes a per-unit subsidy of $1 on gas. The subsidy is paid to consumers. 2a). What is the short-run impact of the subsidy on (1) Market price, (2) Market quantity, (3) Firm Quantity and (4) Number of firms in the gas market. Complete the diagrams below to show the Short-run impact on the market and the firms. (Draw the graph and label it) MARKET FIRM Q Q 2b). What is the long-run impact of the subsidy on (1) Market price, (2) Market quantity, (3) Firm Quantity and (4) Number of firms in the gas market. Complete the diagrams below to show the Short-run impact on the market and the firms. (Draw the graph and label it) MARKET FIRM P