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Q2: Consider a shirt manufacturer called JCrew. The revenue of shirts is 100$. Shirt making needs two inputs - labor and buttons. JCrew has to decide whether to locate in an isolated town or in a city with other firms. The labor cost and cost of buttons depend on how many other firms are there in the city. Specifically, labor cost is given by 10/ and cost of buttons is given by we. Here, N is the total number of firms in the city. (a): Suppose there is just one firm, JCrew, in the city. What is its profit? [4 points] (b): If a city has more firms, does labor cost for JCrew increase or decrease? Explain the economic intuition. [3 points] (c): What happens to cost of buttons for JCrew if there are more firms in the city? Explain the economic intuition. [3 points] (d): Draw the labor cost, button cost and total cost in a graph when there are 1,2,3,4,5,6 firms in the city. [5 points] (e): What is the profit of this firm when there are 1,2,3,4,5,6 firms in the city. Explain the intuition. [3 points] (f): In equilibrium, how many firms will locate in the city and why? [2 points]