Please draw a monopolistic competition graph that clearly shows and labels both excess capacity and markup in the long run. Include the demand (D) curve, marginal revenue (MR), marginal cost (MC), and average total cost (ATC). Show the firm producing where MR = MC, then label the price from the demand curve at that quantity. Please also show how markup is the amount by which price is above marginal cost, and how excess capacity is the difference between the firms actual output and the output where ATC is minimized. Then briefly explain what each one means.
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