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Question 5 [15 points] The market demand and supply curves in a perfectly competitive industry are given by: Pd = 32 - Q/750 and Ps = -16 + Q/250. Complete the following questions. a) Draw these functions on the graph below. Demand 36 28 Price ($) 4000 8000 2000 16000 20000 24006 Reset Quantity b) Calculate the equilibrium price and output in this industry. Equilibrium price = $0 Equilibrium output = 0 c) Now assume that an additional firm is considering entering. This firm has a short-run MC curve defined by MC = 7 + 0.5q, where q is the firm's output. If this firm enters the industry, what output should it produce? (Hint: It will set P = MC.) Output = 0