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1. Presume that Sooner Airlines, All-Athlete Airways, and Cheapo Express are three airlines competing in a monopolistically competitive market. On a single graph pleases illustrate how Sooner Airlines would reach short-run equilibrium after initially operating at a loss. Be sure to label fully: DWL, PMC; PPC; QMC; QPC; etc.
2. Please briefly describe how the market returned to equilibrium
3. In your graph in part 1, is there any dead weight loss. If so, must the government attempt to regulate the market to increase efficiency?
4. On a single graph, please compare the long-run equilibrium situation for a monopolistically competitive firm and for a firm in a perfectly competitive market.
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