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In a monopolistically competitive industry, total profits are a function of the number of firms n as follows:
( ) = 10 - 0.1 ^(2)
Furthermore, consumer surplus is a function of n : ( ) = ^(3/2)
i) In the long-run equilibrium how many firms will exist in this industry?
ii) What is the socially optimal number of firms in this industry?
iii) Does the long-run equilibrium exhibit insufficient or excessive production?
iv) Illustrate your results graphically (on the same graph), using the curves for consumer surplus, total profits and total surplus.
Please provide answers and show step by step calculation
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