392PART FIVEFIRM BEHAVIOR AND THE ORGANIZATION OF INDUSTRY1.Describe the three attributes of monopolisticcompetition. How is monopolistic competition likemonopoly? How is it like perfect competition?2.Draw a diagram depicting a firm in a monopolisticallycompetitive market that is making profits. Now showwhat happens to this firm as new firms enter theindustry.3.Draw a diagram of the long-run equilibrium in amonopolistically competitive market. How is pricerelated to average total cost? How is price related tomarginal cost?4.Does a monopolistic competitor produce too much ortoo little output compared to the most efficient level?What practical considerations make it difficult forpolicymakers to solve this problem?5.How might advertising reduce economic well-being?How might advertising increase economic well-being?6.How might advertising with no apparent informationalcontent in fact convey information to consumers?
This is the end of the preview. Sign up
access the rest of the document.
This note was uploaded on 07/30/2010 for the course ECON 120 taught by Professor Abijian during the Spring '10 term at Mesa CC.