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Using this graph, apply your knowledge to the following two scenarios.  Show detailed calculations! Scenario 1: Assume...

Using this graph, apply your knowledge to the following two scenarios.  Show detailed calculations!

Scenario 1: Assume that the graph is being applied to a profit-maximizing monopolistically competitive scenario (hint: be careful here - the firm in Scenario 1 is a monopolistic competitor, not a monopolist!).

a. How many units would the monopolistically competitive firm produce in the long run, and what price would be charged per unit?

b. In the long run, how much profit would the monopolistic competitor make? Explain your answer.

Scenario 2: Now assume that the cost curves in the graph are being applied to a profit-maximizing perfectly competitive scenario.

c.  Suppose you were studying a perfectly competitive firm facing the same costs as shown in this graph. In the long run, how many units would this perfectly competitive firm produce and how much would the perfectly competitive firm charge per unit?

d. How much revenue would the perfectly competitive firm (facing the same costs as shown in this graph) make in the long run?

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