Question 12 (Perfect Competition and Monopoly with Cost Curves II) a) Illustrate a monopoly that is incurring profits. b) Illustrate the Socially optimum and Fair Return Prices that a government can illustrate on a monopoly. Hint: Figure 10.10 or page 386. Question 13. (Monopolistic Competition) Assume that a Monopolistic Competitive firm can be described by the following equations: P = 4,000 - Qd (Demand for the firm) P = 1,000 + Qs (Supply : MC for the Monopolistic Competitive Firm) The Marginal Revenue for the Monopolistic Competitive Firm is: MR : 1,000 -2Q a) State the characteristics of Monopolistic Competitive Markets. b) Calculate the output and price that this firm will set to maximize profits given the equations above. C) Sketch a diagram illustrating the optimal amount of output and price of a Typical Monopolistic Competitive Firm in the Long Run