Let us study the market for carrots. We know from an industry report that the market demand for carrots in Canada is D(p)=1500-55p and the industry supply for shields is S(p)=95p. Assume also that the cost function of each shield firm in this industry is C(q)=(q^2 /2)+ 1, where marginal cost MC = q.

Graph the industry demand and supply curves and find the price and quantity of equilibrium if this industry was perfectly competitive. What is the profit of each firm? Do you anticipate entry or exit in this industry? Why? What will happen to the price of carrots in the long run? Why?