Given a perfectly competitive firm at equilibrium and earning zero economic profit. Assume there is an increase in market demand,

• Illustrate the effect on the perfectly competitive firm with this increased market demand.
• Explain the effect on the market supply and demand and the market equilibrium price.
• Describes what happens to the market supply and the market price as a result.
• In what case would the market retum to the original market price? Draw the long run supply curve in this situation.
• Is there any instance when the new equilibrium price would not equal the original market price? What would have to happen to the long run supply curve?