1. Figure below, shows the situation facing by Mike's Bikes, a producer of mountain bikes. The demand and costs of other mountain bike producers are similar to those of Mike's Bikes.
a. What quantity does the firm produce and what is its price? Calculate the firm's economic profit or economic loss.
b. What will happen to the number of firms producing mountain bikes in the long run?
c. How will the price of a mountain bike and the number of bikes produced by Mike's Bikes change in the long run?
d. How will the quantitu of mountain bikes produced by all firms change in the long run?
e. Is there any way for Mike's Bikes to avoid having excess capacity in the long run?
f. Is the market for mountain bikes efficient or inefficient in the long run? Explain your answer.