a.Assume bananas are sold in a perfectly competitive market and firms are making zero economic profit. Explain and illustrate graphically, the effect of an increase in market price on the short run position of a single firm selling bananas.(Hint: Make sure your graph includes the firm's demand curve, marginal revenue curve, marginal cost curve and average total cost curve and also explain the profit maximising position of a firm).

b.Based on the short run position identified in Q2 (a) explain and illustrate graphically effect of entry/exit on the long run position of the firm.

question b require:

-Start diagram with market/industry at equilibrium and firm 's diagram same with Qs2(a).

-Explain what will happen now due to the firm's situation (profit or loss) as seen in Qs 2(a).

-Remember to explain the impact on the market and on the firm.

-What is the outcome in the long run for both the market and the firm.