Question 1: Assume that apples are produced in a perfectly competitive market. Columbia’s Orchard is a typical firm that grows and sells apples. Currently, Columbia earns zero economic profit, and the market price of apples is $10 per basket.   Draw a correctly labeled graph showing Columbia’s demand curve, average total cost curve, and marginal cost curve, and show the profit-maximizing quantity, labeled Qc. Answer:   2. Suppose an increase in the popularity of apple, the demand for apple increases. How will the increase in the demand for apples affect Columbia’s economic profit in the short run? Explain. Answer:   3. What will happen to Columbia’s economic profit in the long run? Explain. Answer:

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