QUESTION 4: 12 pts. Suppose a shoe retailer operates in a monopolistically competitive industry and that it is currently in long-run equilibrium. Increase 2 2 a. Draw a correctly labeled graph showing the following: i. Price (labeled P1) (1 pt) ii. Quantity (labeled Q1) (1 pt) ili. The socially optimal quantity (QS) (1 pt) iv . The revenue maximizing quantity (QR) (1 pt) b. Is the firm operating where there are economies of scale when in long-run equilibrium at Q1? Explain. (2 pts) Suppose the government implements a lump sum tax on the shoe industry. Describe the impact on each of the following: i. The firm's price and quantity. Explain. (2 pts) ii. The level of economic profit. (1 pt) d. Given your answer to part c please answer the following: i What would need to be true for the sample firm to continue to operate in the short-run after the tax was imposed? 1 pt ij What would happen to the number of firms in the industry in the long-run? Explain. (2 pts)