1. Draw graphs showing a perfectly competitive firm and industry in long run equilibrium.
a. How do you know that the industry is in the long-run equilibrium?
b. Supposed that there is an increase in demand for this product. Show and explain adjustment process for both firm and industry
c. Show and explain the long-run adjustment process for both the firm and the industry. What will happen to the number of firms in the new long-run equilibrium?