This question asks you to analyze how the ideal conditions of a purely (perfectly) competitive industry influence the motives and decisions-of its participating firms. In perfect competition, the ideal conditions cause firms to experience differences in their total profit levels in the short run and the long run.

1. 1.In the long run, perfectly competitive firms produce an output level Q* where Price = Marginal Cost = Minimum Average Total Cost. How does this outcome affect the entire economy? Please provide a complete explanation.(Throughout your answer to this question, use graphs, completely labeled, to accompany your written analyses.)