Please Submit graphs to the appropriate dropbox.
A Rose By Any Other Name is a typical profit maximizing floral shop operating in a constant-cost, perfectly competitive industry that is in long run equilibrium.
A) Draw correctly labeled side-by-side graphs for the floral market and for A Rose By Any Other Name and show each of the following.
1) Price and output for the market
2) Price and output for the firm
B) Assume that flowers are a normal good and that consumer income decreases. Assume A Rose By Any Other Name continues to produce. On your graphs in part (A), show effect of the decrease in income on each of the following in the short run.
1) Price and output for the market
2) Price and output for the firm
3) Area of profit or loss for the firm
C) Following the decrease in consumer income, what must be true for A Rose By Any Other Name to continue to operate in the short run?
D) Assume that the industry adjusts to reach a new state of long run equilibrium. Compare the following between the initial and new long run equilibrium.
1) Price in the industry
2) Output of a typical firm
3) The number of firms in the floral industry
