1. Draw the graph of a monopolistically competitive firm in long run equilibrium. Label the profit maximizing level of output Qmc and the price the firm will charge Pmc. Next label the allocatively efficient level of output Qa and the corresponding price Pa. How is the market negatively impacted by monopolistic competition? Shade in the loss to society on the graph.
2. Draw side by side graphs of a monopolistically competitive market and a firm operating in that market earning short run losses.

2a. Using your graphs, show the process that will result in the firm earning zero economic profit.

**There is no additional information present to draw the graphs for these questions**