12 Monopolistic Competition and Advertising 1. Bliss, a small dress boutique known for their vibrant patterns, has reached a long-run equilib- rium, selling 800 dresses per month at a price of $150. (a) Draw a diagram showing demand, marginal revenue, average total cost, and marginal cost curves for Bliss. Be sure to label any excess capacity and/or markup. (b) Is Bliss making a profit or loss? Explain. (c) Suppose that the government decides to regulate dress production to make it more efficient (i.e.,, P = MC). Explain what would happen to the price of Bliss's dresses and the quantity it sells. Will there still be a markup and/or excess capacity? What would happen to Bliss's profit