Question 2 - please answer all the questions with elaboration and support your answers with examples

(a) Differentiate fixed costs and variable in the short run. Classify the following as fixed or variable costs: advertising expenditures, fuel, interest on company-issued bonds, shipping charges, real estate taxes, wage payments, depreciation and obsolescence charges and sales taxes.

(b) Using diagrams for both the industry and a representative firm, illustrate competitive long-run equilibrium. Assuming constant costs, employ these diagrams to show how

(i) an increase and

(ii) a decrease in market demand will upset that long-run equilibrium.

Trace graphically and describe verbally the adjustment processes by which long-run equilibrium is restored. Now rework your analysis for increasing- and decreasing-cost industries, and compare the three long-run supply curves.

(c) An economy is faced by the exhaustionof an importantnatural resource for asometime and recently, new resources was discovered after introducingimproved technology. Illustrate how these events will affectthe economy's Production Possibility Curve.