A particular market structure has the following characteristics: the cross-price elasticity of the goods bought and sold in this market is +3.0, firms must lower price to sell more, and there is relatively easy entry into this market.
Illustrate a firm in this market structure that is making short run economic profits. Specifically identify/label the areas that represent total revenue, total cost, and profit.
Describe and illustrate long run equilibrium in this industry.
What key characteristic of this industry is cause for debate among economists? Why?