1A.Below construct a market for Company A in a monopolistic competition situation in long run equilibrium. Draw the demand curve, marginal revenue, and marginal cost curves for the firm.Identify the quantity of output the firm supplies and the price itcharges labelling both as q1 and p1.

B. Suppose the overall number of demanders for the industry good increases. Return to your graph in A and draw the new demand curve (D2) and marginal revenue curve (MR2).Identify the new profit maximizing quantity of output the price as q2 and p2.

C.State the effect on the firm's average cost curve and marginal cost curve from the change in consumer demand.

D.Using the relationship between average cost (AC) and price, explain whether the firm is earning positive, negative, or normal or zero profits.

2A.Reproduce Figure 12.5.

\f