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?

(Write a minimum of one sentence and provide your calculations for full credit. Please make sure that you type up your calculations.)

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? (Write a minimum of one sentence for full credit)

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? (Write a minimum of at least one sentence and your calculations for full credit. Please make sure that you type

up your calculations.)

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? (Write at least one paragraph for full credit)

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? (Write a minimum of one paragraph and your

calculations for full credit. Please make sure that you type up your calculations.)

Industry Firm MC P So ATC S1 B. b 21.6 -. P1=MR1 17.04 16.8 Po=MRo 11.52 D1 -Do 12 24 28 Q 960 1,080 1,200 V