Answer to Question #218945 in Microeconomics for 5ty

Question

Suppose the wool industry is perfectly competitive. Draw 6 diagrams showing the equilibrium positions of a competitive firm in the short run and in the long-run.i)Assuming that a single firm is enjoying abnormal profits, draw another diagram to show the effects of the development of artificial fibres that reduces the demand for wool on the firm’s equilibrium position.

Answer 1

i)