## What is the equilibrium price and quantity?

Entry and exit of firms occur in the long run, but not in the short run. Why? What is meant by the long run and the short run? Would you say that entry is more or less difficult than exit? Use the following data for the exercises below.

a. What is the equilibrium price and quantity? b. Draw the demand and supply curves. If this represents perfect competition, are the curves individual-firm or market curves? How is the quantity supplied derived? c. Show the consumer surplus. Show the producer surplus. d. Suppose that a price ceiling of \$12 was imposed. How would this change the consumer and producer surplus? Suppose a price floor of \$16 was imposed. How would this change the consumer and producer surplus?

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