Consider the equilibrium depicted as your final short-run equilibrium (SRE) in Question 3. Is your price depicted in Question 3, P2 , a Long Run Equilibrium price for the natural gas industry? If so,...

Consider the equilibrium depicted as your final short-run equilibrium (SRE) in Question 3. Is your price depicted in Question 3,
P2
, a Long Run Equilibrium price for the natural gas industry? If so, explain why. If
P2is not a Long Run Equilibrium price, please explain what changes must take place to return the industry to long run equilibrium. As part of these changes, what, if anything, will happen to the supply curve, market price, the optimal output of an individual firm, the total number of firms in the industry, and the individual firm’s profit?

Assume the natural gas industry is still living with the short-run supply disruption. Then  unusually warm weather causes demand for natural gas to decrease unexpectedly. Analyze the impact of this reduction in demand in for natural gas.

• For this analysis, assume the natural gas industry isperfectly competitive, demand is downward sloping, supply is upward sloping, and production technology results in traditional U-shapedATC andAVCcurves.


• Finally, for questions 1, 2, 3, and 4, market price isalwaysgreater than the minimum of theAVCcurve.