For questions 1, 2, and 3, consider the retail market for regular gasoline. Assume, for purposes of these first three questions, that this market is currently a perfectly competitive market with the following conditions: 1) Downward sloping demand; 2) Upward sloping supply; and 3) U-shaped Average Total Costs and Marginal Costs for individual firms.

Question 1) Graphically (using side-by-side graphs) depict the perfectly competitive market price and quantity as well as individual firm's profit maximizing quantity under the assumption that we are initially in Long Run Equilibrium.

Question 2) On September 14, 2019, a drone attack struck two oil factories in Saudi Arabia. The attack has produced significantly higher oil prices. These higher oil prices have forced retail gasoline stations to pay more to refineries to acquire gasoline. For this question, assume the effect of this higher cost for inputs will be to shift the MC and the ATC of each retailer upward by exactly the same vertical amount per gallon. [Hint: this parallel shift in both curves will, then, leave the minimum ATC above the same output as you had shown in question (1) above.] Discuss and depict the movement to a short run equilibrium under these conditions. Be sure to graphically indicate the original and new prices and quantities, the size of the cost increase, the number of firms, and the size of profits.

Question 3) For this question, discuss and depict the movement from the Short Run Equilibrium in question (2) to the new Long Run Equilibrium in this industry. Be sure to graphically indicate the original and new prices and quantities, the number of firms, and the size of profits. (Both a graph and narrative are needed for this question - upload one file with both here.)