Answer Happy

A representative firm producing watermelons is earning a normal profit at a price of $35 per hundred pounds. 1.) Using the line drawing tool, draw the diagram for the industry. Label your curves 'Do' and 'So'. 2.) Using the point drawing tool, indicate the equilibrium price and quantity. Label your point 'E'. Note: Carefully follow the instructions above and only draw the required objects. Assuming that the industry is a constant-cost industry, use the diagram to show the long-term adjustment of the industry as demand falls over time. 1.) Using the line drawing tool, draw the new demand curve. Label your curve 'D₁'. 2.) Using the line drawing tool, draw the new supply curve. Label your curve 'S₁'. 3.) Using the point drawing tool, indicate the new long-run equilibrium price and quantity. Label your point 'Equilibrium LR'. Note: Carefully follow the instructions above and only draw the required objects. The market adjusts to decreases in demand with O A. the exit of existing firms and a decrease in supply. In the long run, the price will remain at $35 per hundred pounds, consistent with normal profits. OB. the exit of existing firms and an increase in supply. In the long run, the price will decrease and cause a contraction of profits. O C. the entry of new firms and a decrease in supply that will cause a decrease in the price and a contraction of profits. O D. the entry of new firms and an increase in supply. the long run, the price will increase, also increasing profits. C Price per hundred pounds Price per hundred pounds 60- 55- 50- 45- 40- 35- 30- 25- 20- 15- 10- 5- 0- 0 60- 55- 50- 45- 40- 35- 30- 25- 20- 15- 10- 5- 0- 0 Units of output (hundreds of pounds) So E Do of output (hundreds of pounds) 5 Q