A) What is the profit maximizing rule for a firm in a monopolistically competitive market? What price will they charge? Is this price higher or lower than the marginal cost?

B) Can a firm in a monopolistically competitive market make an economic profit in the long run? Why or why not?

C) Assume sports drinks are a monopolistically competitive market. Mike Trout is spotted drinking Powerade during practice. When asked about it, he claims that he believes he is having such a superb career because he started drinking Powerade. Powerade did not pay Trout to say this so nothing has changed the company's costs. Graphically depict how this affects Powerade in the short-run assuming demand increases and becomes more inelastic. Also assume the market is in long-run equilibrium before this happens.

D) Graphically show what happens in the long-run. Assume that the demand for Powerade is permanently more inelastic. Can Powerade charge a higher markup?