The market for corn chips is perfectly competitive with many small producers. Each small firm produces 5 million packets of chips per year. A packet of chips has an average total cost of $1.60 and an average fixed cost of $0.20. Each packet sells for $2:50.

a) Assuming firms are maximising profit, what is the marginal cost of producing a packet of corn chips? (2 Marks)

b) Calculate the profit (loss) on an individualpacket of corn chips.(2 Marks)

c) Is the industry in a long run equilibrium? Explain your answer. (3 Marks)