Consider a perfect competitive market for Sugar where many firms are producing Sugar. However, they are currently making economic losses.

a.Draw two graphs and illustrate the present situation for the typical firm and the Sugar market.

b.Assume there is no change in either demand or the firms' cost, explain what will happen in the long run to the price of sugar, marginal cost, average total cost, the quantity supplied by each firm, and the total quantity supplied to the market. Show and explain with a hypothetical graph.

observation: use hypothetical data to build the graphs. You can choose price and quantities.