1. Assume that prior to the outbreak of the coronavirus (Covid-19), the natural gas industry was in Long Run Equilibrium (LRE).

• Using our side-by-side graph methodology (with market on the left and individual firm on the right), graphically depict the market equilibriumP0andQ0, the optimal output of an individual firm representative of the other firms in the industry at this LRE (labeled asq0), and the individual firm's profit if any (shaded and clearly labeled).
• Provide a brief narrative explaining the setting and the profitability of an individual firm in an LRE (including why there is a certain level of profit in this setting).
• Reminder: Be sure to label all relevant points and axes.

2. Now analyze the impact of the emergence of the coronavirus (Covid-19). Assume the epidemicsignificantly reduces the supply for natural gas and that there are no changes to the demand for natural gas.

• On the same graph you produced in Question 1, graphically depict any changes affecting the market for natural gas and any changes that impact the individual firm.
• Show the movements of the curves (if any) and the new Short Run Equilibrium (SRE).
• Indicate the new market equilibriumP1andQ1, the optimal output of an individual firm representative of the other firms in the industry at this SRE (labeled asq1), and the individual firm's profit, if any (shaded and clearly labeled).
• Provide a brief narrative explaining the movements and the resulting change in an individual firm's profit, if any. Please make sure you address the changes in the market equilibrium quantityQ, market priceP, and the individual firm's profit-maximizing quantityq, if any.
• Reminder: be sure to label all relevant points and axes.

3.

Assume the natural gas industry is still living with the short-run supply disruption that you modeled in Question 2. Then, in December of 2021, unusually warm weather causes demand for natural gas to decrease unexpectedly (as discussed in the December 6, 2021Wall Street Journal article). Analyze the impact of this reduction in demand in for natural gas.

• On the same graph you produced in Question 2, graphically depict any changes affecting the market for natural gas and any changes that impact the individual firm.
• Show the movements of the curves (if any) and thenew Short Run Equilibrium (SRE).
• Indicate the new market equilibriumP2andQ2, the optimal output of an individual firm representative of the other firms in the industry at this SRE (labeled asq2), and the individual firm's profit, if any (shaded and clearly labeled).
• Provide a brief narrative explaining the movements and the resulting change in an individual firm's profit, if any. Please make sure you address the changes in the market equilibrium quantityQ, market priceP, and the individual firm's profit maximizing quantityq, if any.