Be sure to label the graphs.   Suppose in the competitive market for a good known as “Tovars” that there are 5,000 firms. Assuming each firm is at a point where P=ATC. Suddenly, a huge number of entrepreneurs enters the market so the number of firms increases by 1,000.   a. Please draw a graph showing the short run effect. Please label the price and quantities initially as P1, q1, Q1 and the short run price and quantities as P2, q2, Q2   b. On the graph in a, please show the long run effect. Please label the long run price and quantities as P3, q3, Q3. Relative to the initial equilibrium (before the entrance of 1,000 firms), What happens to the P? What happens to the q? What happens to the Q?

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