Using Figure 15.1, identify which demand curve would belong to that of a purely competitive firm and which would belong to a monopolistically competitive firm and explain your reasoning
What will be an ideal response?
The demand curve that a monopolistic competitor faces is likely to be less elastic than the demand curve that a perfectly competitive firm faces. Demand is more elastic than the demand curve that a monopolist faces because close substitutes for the products of a monopolistic competitor are available. Therefore D1 belongs to the purely competitive firm and D2 belongs to the monopolistically competitive firm.
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Recall the Application. The European nations that adopted the euro as a common currency no longer have their own central banks and are therefore no longer able to conduct their own independent
A) trade policy. B) fiscal policy. C) international investment. D) monetary policy.
Because the amount of labor a firm employs can be changed, the cost of labor is known as
A) minimum cost. B) variable cost. C) maximum cost. D) fixed cost. E) an unavoidable cost.