2. A. Suppose all firms in a monopolistically competitive market are characterized by the graph below in the short run. Explain how the market adjusts to the long run equilibrium by stating: i. Whether new firms will enter the industry or existing firms will exit the industry ii. How the demand faced by the individual firm changes iii. How the marginal revenue of the firm changes iv. How these changes impact the individual firm's quantity of production, price, and profits v. Until when will there still be these changes (a) A Profitable Firm B. Suppose all firms in a monopolistically competitive market are characterized by the graph below in the short run. Explain how the market adjusts to the long run equilibrium by stating: i. Whether new firms will enter the industry or existing firms will exit the industry ii. How the demand faced by the individual firm changes iii. How the marginal revenue of the firm changes iv. How these changes impact the individual firm's quantity of production, price, and profits v. Until when will there still be these changes

2. A. Suppose all firms in a monopolistically competitive market are characterized by the graph below in the short run. Explain how the market adjusts to the long run equilibrium by stating: i. Whether new firms will enter the industry or existing firms will exit the industry ii. How the demand faced by the individual firm changes ill. How the marginal revenue of the firm changes iv. How these changes impact the individual firm's quantity of production, price, and profits V. Until when will there still be these changes (a) A Profitable Firm Price. marginal MC AFC Prof ATC NE. Quantity Profit morning quantity B. Suppose all firms in a monopolistically competitive market are characterized by the graph below in the short run. Explain how the market adjusts to the long run equilibrium by stating: i. Whether new firms will enter the industry or existing firms will exit the industry il. How the demand faced by the individual firm changes ill. How the marginal revenue of the firm changes iv. How these changes impact the individual firm's quantity of production, price, and profits v. Until when will there still be these changes(b) An Unprofitable Firm Price, cost, marginal MC revenue ATC ATCu Pu Loss MRy Qu Quantity Loss-minimizing quantity