Graph two equations with price and cost on the vertical axis and the number of firms on the horizontal axis. Label your PP and CC curves as well as the equilibrium number of firms and the equilibrium price level and average cost.
Assume that San Francisco (SF) does not trade with the rest of the Bay Area and the market for sourdough bread in SF is monopolistically competitive, each baker makes a differentiated sourdough and sets their own price.
Bakeries within this market are symmetric - opening a bakery requires a fixed cost "F", while each loaf sold incurs a marginal cost C.