2. Consider the market for harmoniums. Assume that some number of identical firms produces harmoniums. Each firm is a price-taker and also able to adjust all of their inputs quickly (thus they are always producing on their long-run cost curves). Because the American Federation of Harmonium Manufacturers (AFHM) successfully lobbied for a host of onerous regulatory requirements, entry of new manufacturers to the market takes time. Thus, in the short run, price can rise above minimum long-run average cost. Assume that each firm's cost function is given by: C(Q) = 5Q3 120Q2 + 1000Q a} After the overnight success of Masters of Harmonium (an Atlanta based Harmonium Octet), the demand for harmoniums skyrockets. Suppose that in period 1 we observe a market clearing price of $1000 and a total of 16,000 harmoniums were sold. Use the fact that each firm acts as a price-ta ker to determine the number of firms in the market in period 1, the number of harmoniums produced by each firm, and each firm's profit. b) The presence of positive profits in the harmonium industry induces entry, and by period 2, enough firms have overcome the regulatory burdens to return the market to its long-run equilibrium. What is the price of harmoniums in period 2? What are firm profits? Assuming we see 24,000 Harmoniums sold in period 2, how many firms are now in the market? c) What incentive did the AFHM have to lobby for entry barriers (regulations)