1. **Problem Statement:** We analyze a single firm's equilibrium price and quantity in a perfectly competitive oil market using producer theory. 2. **Key Concepts and Formulas:** - In perfect competition, firms maximize profit where marginal cost (MC) equals market price (P). - Equilibrium price is where market supply equals market demand. - Firm's supply curve is its MC curve above AVC. 3. **Step 1: Find Firm's Equilibrium Price and Quantity** - From the left graph, the MC curve intersects the ATC curve at minimum ATC near 18 million barrels/day. - The firm's equilibrium price equals the MC at this quantity, approximately $30$ (estimated from graph scale). - Quantity produced by the firm is about $18$ million barrels/day. 4. **Step 2: Find Market Equilibrium Price and Quantity** - From the right graph, the supply curve (S1) and demand curve (D) intersect near price $30$ and quantity about $100$ million barrels/day. - This price matches the firm's equilibrium price, confirming market equilibrium. 5. **Interpretation:** - The firm produces where $MC = P = 30$. - Market clears at $P = 30$ and quantity $Q = 100$ million barrels/day. **Final answer:** Firm equilibrium price $P^* = 30$ Firm equilibrium quantity $q^* = 18$ million barrels/day Market equilibrium quantity $Q^* = 100$ million barrels/day