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Prompt: Suppose a small town's iced coffee market is monopolistically competitive. That is, it is made up of many profit maximizing iced coffee vendors where it is low in cost to begin selling iced coffees such that breaking even over time is expected and each vendor differentiates their version of iced coffee in terms of flavors (mocha, vanilla, etc.), ice to coffee ratio, and blending methods. Furthermore, each iced coffee vendor makes independent decisions. a) What market characteristic(s) rules out the iced coffee market from being perfectly competitive? From being a monopoly? From being an oligopoly? (25pts) b) Why would each of the iced coffee vendors want to differentiate their iced coffee compared to their 4 competitors? (25pts) c) If one of the iced coffee vendors decided to increase the price on its iced coffee would we expect a more inelastic or elastic price elasticity of demand response to its brand loyal customers? Why? (25pts) d) If one of the iced coffee vendors decided to increase the price on its iced coffee would we expect a more inelastic or elastic price elasticity of demand response to its non-brand loyal customers? Why? (25pts)