The following graphs illustrate a perfectly competitive industry and a firm operating in that industry:

Answer the following questions based off of the industry and firm graphs above:

1) The industry is initially in equilibrium at point A. At what quantity will the firm choose to operate and what are the economic profits at that quantity?

2) Now lets suppose the industry has shifted and is now in equilibrium at point B. What could have caused the industry equilibrium point to change from A to B?

3) Given that the industry is in equilibrium at point B, at what quantity will the firm choose to operate and what are the economic profits at that point?

4) The market has shifted for the second time and the industry is now in equilibrium at point C. What could have possibly caused the market equilibrium to shift and change from point B to C?

5) The industry is in equilibrium at point C, at what quantity will the firm choose to produce and what are the economic profits?Why did the economic profits change relative to when the market was in equilibrium at point B?