2. Suppose that the market for hand sanitizer is perfectly competitive. The demand function for hand sanitizer is: D(P) = 1500 5P where P is the price per ounce. Each supplier's cost function is given by: C(y) = 450 + 32E if y > 0, but zero if the rm exits the market (the equipment for producing sanitizer can be immediately transformed to make vodka). In other words, the xed cost is not sunk. Each company takes the price as given. (a) Derive the marginal and average cost functions for each rm and graph them. (b) Identify the rm level supply curve on your graph. At what price will a rm shut down? Explain your answer. (c) Suppose there are 25 rms in the market. What is the equilibrium price of an ounce of hand sanitizer? How many ounces does each rm sell and what is a rm's prot? (d) Assume there is free entry and exit of bakeries. What do you predict will happen to this market? (e) What conditions must the price of hand sanitizer, the number of rms, and each rm's output satisfy to be in longrun equilibrium and determine these quantities. (f) Suppose the market demand curve shifts to 19(1)) 2 650 10P. Would you expect entry or exit? How many rms will be in the industry in longrun equilibrium