Market structures: perfect competition & monopolistic competition (10marks)

Explain carefully the adjustment process of a 'monopolistically competitive' firm transitioning from the short-run to the long run. (2 marks) (Make the steps clear in your answer.)

Explain what is meant by the 'advertising trap' for a 'monopolistically competitive' advertising firm. In your answer, explain the adjustment process from the short run to the long run when the firm invests in advertising (3 marks) (Make the steps clear in your answer.)

Explain the main differences between a 'perfectively competitive' market and a 'monopolistically competitive' market. In answering this question, describe the differences in the demand curves, marginal revenue (MR) curves, marginal cost curves, price, and output in these respective markets? (Note: you cannot illustrate graphically, so your explanation needs to be very clear by specifically addressing each difference.) (5 marks)