How do long-run profits compare for the two types of firms

Question

Problem

Monopolistic Competition and Perfect Competition Compared Illustrated to the right are the marginal cost and average total cost curves for a small firm that is in long-run equilibrium.

a. Locate the long-run equilibrium price and quantity if the firm is perfectly competitive.

b. Label the price and quantity p₁ and q₁.

c. Draw in a demand and marginal revenue curve to illustrate long-run equilibrium if the firm is monopolistically competitive. Label the price and quantity p₂ and q₂.

d. How do the monopolistically competitive firm's price and output compare to those of the perfectly competitive firm?

e. How do long-run profits compare for the two types of firms?

The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.