Question: The following diagram shows the market situation for the perfectly competitive market for wheat. The wheat market is currently at short-run equilibrium E, where the price P* is not high enough to generate positive economic profits for perfectly competitive firms in the industry, but is above the shut-down point.

Part 1: Suppose PLR is the long-run price for this market. Use the copy tool to illustrate how the market will adjust toward this long-run equilibrium. Label the new demand curve, if any, as D2 and the new supply curve, if any, as S2.

Part 2: Use a double drop line to identify the new equilibrium quantity-price combination and label this point ELR.