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3. The market for masks is perfectly competitive with 1000 identical rms operating in the market. Assume an individual rm's marginal cost is M C

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3. The market for masks is perfectly competitive with 1000 identical rms operating in the market. Assume an individual rm's marginal cost is M C = 1 + q and the average total cost is ATC = 1 + %q + 5q0. The market demand for masks are given by Q9 = 19000 1000p. (a) Find a representative rm's protmaximizing quantity. How much prots does a rm make? (b) Suppose the demand for masks suddenly increased by 4000 units for each price. Assume the sensitivity to price remains the same. Explain the shortrun and longrun equilibrium in the market? Will a rm's prot change in the longrun? Estimate the price-elasticity of market supply for the change in price caused by a shift in demand in the shortrun

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