Part II. Show Graphically 1. Claim: Producing more than the market equilibrium quantity result in dead weight loss a. True b. False (Circle one) Show your answer using welfare analysis (Show the CS, PS and TS clearly)

2. For a constant cost industry and free entry and exit, the long run market supply curve (LRMS) must be horizontal. Show this by sketching a typical firm's relevant cost curves on the left panel and the market supply and demand on the right panel.