4.) Consider the diagram below of a profit maximising pearl tea operating in a monopolistically competitive market and answer the following questions:

4.a. i) What quantity would this firm produce and what price would it charge? Only correct answers for both.

4.a. ii) Would this firm be making a profit or loss, and how big would the profit or loss be? (

4. b) Compare the output and price between a profit maximising monopolistic competitive firm and a perfect competitive firm in the short run. Only correct answers for both

4.c) Which factor(s) determine the difference between economic profit and accounting profit?

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4.d) If a 18 per cent rise in the price of Adidas running shoes decreases the quantity of Adidas shoes demanded by 33 per cent and increases the quantity of Nike running shoes demanded by 21 per cent:

4. d.i) Calculate the Price Elasticity of Demand for Adidas running shoes.

MC ATC Per Litre) H K 4 Dollars 2 G Demand MR 10 12 14 Quantity