Wheat is produced under perfectly competitive conditions. Individual wheat farmers have U-shaped long-run average cost curves that reach a minimum average cost of $3 per bushel when 1,000 bushels are produced.

a) If the market demand curve for wheat is given by Q=2,600,000 - 200,000P , in long- run equilibrium, what will be the price of wheat, how much total wheat will be demanded, and how many wheat farms will there be?

b) Suppose that demand shifts outward to Q=3,200,000 - 200,000P . If farmers cannot adjust their output in the short-run, what will market price be with this new demand curve? What will the profits of a typical farm be?

c) Given the new demand curve in part (b), what will be the new long-run equilibrium? That is, Compute market price, quantity of wheat produced, and the new equilibrium number of farms in this new situation.