25 points Save Answer The potassium industry is perfectly competitive. Firms act as price takers and each firm in the industry operates only one plant. The following table shows data on incumbent plants in the potassium industry: Average Unit Annual Fixed Required Salvage Capacity of a Number of Variable Cost Costs investment to value of plant plants construct new plant plant (millions per (millions) (millions tons per year) year) $4 per ton $70 Assume that each firm's AVC is constant up to the capacity of its plant. Further, assume that once built, a firm's plant has zero redeployment value. Finally, assume that a typical entrant has a cost structure identical to the Type 1 firms and that there are many potential entrants. Other information: Average variable cost is constant for any volume of output up to full capacity operation. Firms have a cost of capital of 10 percent. All new plants that might be built would be identical to existing plants . Market demand is given by the equation, Q = 160 -5P, where the price P is measured in dollars per ton and quantity Q is measured in millions of tons. Answer the following questions: 1. In the short run, what is the market supply of potassium at a market price of $12 per ton? 2. What is the short-run equilibrium price for potassium? How much potassium would be bought and sold at the short-run equilibrium price? 3. How much potassium would be supplied by incumbent firms if the expected market price in the long run was $11 per ton