Consider the perfectly competitive market for an "experience" good - one whose quality cannot be determined until after purchase.

1. In a static (single period) model where the firm is free to choose its technology, determine wether either of these can arise at the equilibrium:

- A long-run competitive equilibrium per-firm output for a situation in which only the high quality technology is available to the firms

- A long-run competitive equilibrium per-firm output when only the low quality technology is available.

Explain in detail.

2. Also, under what circumstances does this outcome imply market failure?