Consider the perfectly competive timber industry it is initally run equilibruim at Quanity0 and Price 0

Draw a supply and demand diagram for the timber market showing equilibrium

Draw a diagram for a typical logging firm in its initial long run equilibrium, showing its marginal cost, average total cost, and long run average cost curves. Are there any profits being made by the firm?

A major use for timber is creation of paper products suppose that a ban on disposable shopping bags substantially increases demand for paper bags. by making updates to your diagram in part a) explain what impact the ban on plastic bags would have on timber market? By makign updates to your diagram from part b) to show how a typical firm reacts to this new situation. Are any profits being made by this firm?

Explain how this diagram adjusts to your diagrams from parts a) and b) (u may consume that its a constant cost industry)