Denzel Partnership presents a new sushi restaurant concept called Sushi 360o that will operate in a perfectly competitive market. The key characteristics of this market are fierce competition, substitutable products between competitors, easy entry and exit for firms, and price being determined by demand rather than any individual firm. The document discusses the cost and revenue graphs that demonstrate long-run equilibrium for a competitive firm. It notes both the advantages of low barriers to entry and incentive for efficiency in a competitive market but also the disadvantages of little control over prices and potential for stolen innovation.

5. Quantity Cost P = MR= AR= D Long run equilibrium in perfect competition MC AC Qe 0

6. Long-run equilibrium (industry) Price Quantity S D 0 P Q^ (industry)

7. Cost Quantity P = MR= AR= D MC AC Q1 C P1 Firm in perfect competition making supernormal profit 0

8. Price Quantity S1 D P1 Q1 S2 P2 Q2 0 Cost Quantity P1 MC AC Q1 C P1 P2 Q2 The impact on a market of supernormal profit 0

9. Short-run losses Cost Quantity C P Q Loss MC AC P=MR=AR=D

10. Break-even price Cost Quantity MC AC P=MR=AR=D

11. Shut down point Cost Output MC AC P=MR=AR=D AVC C E D B P A P1 Q 0 Loss