Consider the market for footballs. Many firms produce identical footballs with identical costs. This graph represents one firm's average total cost (ATC), marginal revenue (MR), and marginal cost (MC) curves. Today, the market demand for and supply of footballs result in an equilibrium price of $9 per football.
1. How will the graph change over time as the industry moves to a long-run equilibrium?
2. Suppose that the market for footballs starts in long-run equilibrium. Then, as a result of media coverage of the Soccer World Cup, children in the United States start playing more soccer and less football.
How will this firm's marginal cost curve change (if at all) in the short run?