1. The downward-sloping demand curve for a monopolistically competitive firm: re
ID: 1213128 • Letter: 1
Question
1. The downward-sloping demand curve for a monopolistically competitive firm:
reflects product differentiation.
eventually will become perfectly elastic as more firms enter.
indicates collusion among firms in the industry.
ensures that the firm will produce at minimum average cost in the long run.
2.
Look at the above figure. In panel C, the output level of a profit maximizing monopolistically competitive firm is represented by the intersection at point:
P.
S.
R.
Q.
3.
Look at the above table. In this market, let's assume that the MC and FC of producing crude oil is equal to zero and that the crude oil market is a duopoly. Let's assume that the two companies are maximizind and dividing the industry profit evenly. If one of the two companies chooses to cheat and generate ten more barrels of crude oil, then the industry output will be _______ barrels.
160
100
90
80
P.
S.
R.
Q.
3.
Explanation / Answer
1.
reflects product differentiation.
as it leads to firms having some level of control over its own price
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