Question 1 (10 points)

1. Draw a graph that reflects a firm in a perfectly completive market with zero economic profit. Don't forget to show the Average variable cost as well.
2. If the market demand for this firm increases. Reflect that increase in the graph and show if there is a profit or loss.
3. If the market demand for this firm decreases. Reflect that decrease in a new graph and show if there is a profit or loss
4. Show in your graph the supply curve.