The market for supplying flowers outside the Jagannath temple in Puri is perfectly competitive. All firms (a firm is a stall) sell flowers in small bamboo baskets. Each existing firm and every potential entrant faces an identical average cost curve. The minimum level of average cost is Rs. 5 per bamboo basket, and occurs when a firm sells 200 bamboo baskets of flowers each day. The market demand curve for a basket of flowers is Q = 28005-P, where P is the market price in Rupees per basket.

1. What is the long run equilibrium price per basket of flowers? (2 points)
2. How many baskets does each firm sell at this price? (2 points)

c. How many firms will be in the market at the long-run equilibrium? (3 points)

d. Suppose the new railway minister starts a new train to Puri, which increases the number of visitors to the Jagannath temple. As a result, the demand curve shifts to the right, and becomes Q = 34005-P. How many new firms will have to enter the market for the long run equilibrium to be established? (4 points)