MONOPOLISTIC COMPETITION
A) Draw a graph showing a monopolistically competitive firm in a long-run equilibrium. What are its profits?
b) Suppose instead that a monopolistically competitive firm sells 5 units of a product, for $4/unit, at an average total cost of $2/unit. Calculate the profits. Would there be entry or exit, and how would that affect the firm’s profits?
c) The primary difference between monopolistically and perfectly competitive firms is _____