a) Describe the factors that drive profits to zero in perfectly competitive markets in the long run. Carefully explain the incentives that drive the market to a long run equilibrium.

b) Why would a firm choose to operate at a loss in the short run? Explain carefully.

c) When do firms decide to shut down production in the short run? Explain carefully.

d) Draw a graph for a perfectly competitive market, specifically showing the short run supply curve. What is the relationship between the short run supply curve and what we talked about in parts (b) and (c)? Explain carefully.

2. a) Describe the factors that drive prots to zero in perfectly competitive markets in the long run. Carerlly explain the incentives that drive the market to a long run equilibrium b) '3.th would a rm choose to operate at a loss in the short run?r Explain carefully. c) 1When do rms decide to shut down production in the short rim? Explain carerlly. d) Draw a graph for a perfectly competitive market, specifically showing the short run supplyr curve. 1|What is the relationship between the short run supplyr curve and what we talked about in parts (b) and {c}? Explain carefully