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Principles of Economics 2e

Review Questions

Principles of Economics 2eReview Questions


What is the relationship between product differentiation and monopolistic competition?


How is the perceived demand curve for a monopolistically competitive firm different from the perceived demand curve for a monopoly or a perfectly competitive firm?


How does a monopolistic competitor choose its profit-maximizing quantity of output and price?


How can a monopolistic competitor tell whether the price it is charging will cause the firm to earn profits or experience losses?


If the firms in a monopolistically competitive market are earning economic profits or losses in the short run, would you expect them to continue doing so in the long run? Why?


Is a monopolistically competitive firm productively efficient? Is it allocatively efficient? Why or why not?


Will the firms in an oligopoly act more like a monopoly or more like competitors? Briefly explain.


Does each individual in a prisoner’s dilemma benefit more from cooperation or from pursuing self-interest? Explain briefly.


What stops oligopolists from acting together as a monopolist and earning the highest possible level of profits?

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