Question 2 (a) Consider a new cupcake shop in town that has a new style of cupcakes that are not available anywhere else. This monopoly cupcake shop has a demand curve given by P = 300 5Q and the shop's total cost is given by 20 + 12Q + 3Q2. How many cupcakes should this shop sell and what price should they charge to maximise profit? What is the monopoly cupcake shop profit? (5 marks) (b) If this shop's cupcakes are the same as all other cupcakes from other shops in the area, then the market is competitive. What would the competitive equilibrium price and quantity be in this case? What is the cupcake shop's profit in this case? (3 marks) (c) Draw a diagram to show the monopoly and competitive equilibria and highlight the dead weight loss caused by the monopoly. Calculate the value of the dead weight loss. (4 marks) (4 +3+4 = 16 marks)