*3 A firm in monopolistic competition produces running shoes. If it spends nothing on advertising, it can sell no shoes at a100 a pair and, for each a10 cut in price, the quantity of shoes it can sell increases by 25 pairs a day so that at a20 a pair, it can sell 200 pairs a day. The firm’s total fixed cost is a4,000 a day. Its average variable cost and marginal cost is a constant a20 per pair. If the firm spends a3,000 a day on advertising it can double the quantity of shoes sold at each price a If the firm doesn’t advertise, what is the quantity of shoes produced and what is the price per pair? b What is the firm’s economic profit or economic loss? c If the firm does advertise, what is the quantity of shoes produced and what is the price per pair? d What is the firm’s economic profit or economic loss? e Will the firm advertise or not? Why?