Consider a highly competitive market where the firms all face the same costs.They start in long run equilibrium with 1000 firms, a price of $10 for the good, and each firm production 100 units.

Using graphs and sentences, trace the effects of an unanticipated reduction in demand for a constant-cost industry in both the short and long run.Describe the effects for the market price, output produced by each firm, market quantity, profits, and the number of firms in the short run, and then describe the effects in the long run.Feel free to make up additional numbers you may need to illustrate the example (Just make sure the numbers move in the right direction).Make sure that you write complete sentences in describing the changes.

The assignment is worth 20 points as part of your homework assignments grade.There are 10 outcomes and each one is worth two points, of which 1 is based on the correct direction of change and 1 is based on the quality of your graphs and written descriptions.

Draw 2 graphs here side by side with individual firm's graph on the left and the market graph on the right;

Provide the answers about the outcomes in full sentences.Example, output rises from X to Y using the numbers you put on the graph.

Describe the effects for the market price, output produced by each firm, market quantity, profits, and the number of firms in the short run, and then describe the effects in the long run.

1.Market price in the short run.

2.Output produced by each firm in the short run.

3.Profit earned by each firm in the short run.

4.Market Quantity in the short run.

5.Number of firms in the short run.

6.Market price in the long run.

7.Output produced by each firm in the long run.

8.Profit earned by each firm in the long run.

9.Market Quantity in the long run.

10.Number of firms in the long run.