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N12. [25 points] Assume that the ceramic coffee cup market is perfectly competitive. BCC is one of the many identical rms producing coffee cups. They own the clay (it is on their land). They rent the factory where they produce cups using clay and labour. They pay market prices for the factory and labour. a. [7 points] Explain how to calculate BCC Marginal Cost for the 1,000th cup. Be clear about any assumptions you are making. b. [10 points] Assume i) the market price for clay increases; and ii) BCC pays higher rent for ctory upgrades that allow each worker to produce more cups than they did before. How do these changes affect BCC's longrun supply curve? Explain your reasoning. Be clear about any assumptions you are making. c. [8 points] An accountant doing BCC's taxes notices that BCC is making positive prots. They claim that this is evidence that the industry is not in the long-run equilibrium. Do you agree? Explain your reasoning