One way to increase profits in your business is to find a way to reduce your cost. Use the average cost and marginal cost curves presented in class to represent a firm that finds a way to reduce its costs. Assume the firm operates in a perfectly competitive industry where the typical firm has no market power and free entry and exit eliminate economic profits. Use your diagram to show the economic profit the firm earns after it reduces its costs but also use your diagram to show how the firm will adjust its price and quantity as other firms enter the industry. Complete your analysis by explaining why the price a firm receives for its products will tend to bear a relationship to its cost structure, even if competition is not perfect