Question 1: Suppose a firm is currently maximizing its profits by producing 100 units of output. Also assume that this firm only uses Capital and Labour in its production process. If the price of labour were to increase and if the firm wanted to continue to produce 100 units of output, what would you expect this firm to do in the long run? Explain using the relevant economic concepts and terminology. Question 2: Provide an explanation for the long-run average total cost curve. I.e. what does the curve represent with respect to the average cost of production? Question 3: A) Under what conditions is a market considered perfectly competitive? B) Are all markets in the real world perfectly competitive? Question 4: A) Assume a firm is producing in a perfectly competitive market structure. When will it make sense for a firm to produce a positive amount of output in the short run? B) Assuming it makes sense for a perfectly competitive firm to produce a positive amount of output in the short run. How would this firm choose the output level? (Hint: what is the profit maximizing choice? You could answer this in words only, but a diagram might help direct you to the answer). C) How do parts B and C combine explain the perfectly competitive firm's supply curve? DD