Imagine you are an entrepreneur in the perfectly competitive gizmo market. Draw a graph showing market supply, market de

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Imagine you are an entrepreneur in the perfectly competitive
gizmo market. Draw a graph showing market supply, market demand,
and equilibrium price and quantity of gizmos in the long run. Draw
a corresponding graph for the individual gizmo manufacturing firm
using the market equilibrium price, average cost curve, and
marginal cost curve. If you line up the two graphs horizontally,
the equilibrium price should be the same on both graphs.
Now suppose that a crucial component used in the manufacturing
of gizmos becomes cheaper. What impact will this have on the gizmo
industry in the short run, in terms of the market price, output of
an individual firm, and market equilibrium quantity? What impact
will this have on your firm’s profits? What impact will this have
in the long run on each of these variables? Show graphically and
explain your reasoning.