A firm in perfect competition and one in monopolistic competition are very similar in that MR = P for firms in both markets.

In a noncooperative environment of pegged exchange rates, if the home nation is experiencing high inflation due to excessive demand, it may choose to ______, which would cause______.

A) forgo the pegged exchange rate; extreme depreciation B) devalue its currency; the foreign nation to suffer deficient demand for its products C) cut the monetary growth rate; a rise in interest rates D) revalue its currency; the foreign nation to suffer excessive demand for its products

Suppose there are 20 competitive firms in a market. The supply curve of each firm is q = 2p. The market demand is Q = 200 - 2p. What is the residual demand curve facing a typical firm?

What will be an ideal response?