. Answer all parts of the question below (a through e). Five points for each correct answer. If you get correct answers to each question a through g, you will receive 35 points, which is an extra two points over the basic 33 points for a Roman numeral question.

Using an appropriate price-quantity diagram, explain how price and quantity are determined in a perfectly competitive industry

Now explain the shape of the demand curve for a representative firm that operates in the competitive industry you have described in part a.

Using an appropriate diagram, explain how the firm can determine its profit-maximizing level of output.

Will the firm that follows your answer to part c always make a profit at its profit-maximizing level of output? Explain your answer.

Does it always make sense for a competitive firm to shut-down if it is unable to earn a profit? Explain why or why not.