Hand written solutions are strictly prohibited 4) Consider the two diagrams below. First diagram represents a typical firm in a purelycompetitive industry. Second diagram represents the supply and demand conditions in thatindustry. Assume all the firms are identical and it is a constant cost industry.(a)(b)Price543N101020 30QuantityAATC40 50$6сл43-210New 5S₁1000 2000 3000 4000 5000QuantityBDescribe the price, output, and profit situation for the individual firm in the short run.Describe what will happen to the individual firm and the industry in the long run. Showthe changes on diagrams A and B.

Perfect competition is a market form with a high number of buyers and a high number of sellers.…

4) Consider the two diagrams below. First diagram represents a typical firm in a purely competitive industry. Second diagram represents the supply and demand conditions in that industry. Assume all the firms are identical and it is a constant cost industry. (a) (b) Price $6 5 4 3 N 1 0 T 10 20 30 Quantity A ATC 40 50 $6 5 4 3 New S S₁ 1000 2000 3000 4000 5000 Quantity B Describe the price, output, and profit situation for the individual firm in the short run. Describe what will happen to the individual firm and the industry in the long run. Show the changes on diagrams A and B.