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CHAPTER 17 - Chapter17 1 ,eachfirm a b c d

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Chapter 17 Monopolistic Competition 1. Because monopolistically competitive firms produce differentiated products, each firm a. faces a demand curve that is horizontal. b. faces a demand curve that is vertical. c. has no control over product price. d. has some control over product price. ANSWER: d has some control over product price. SECTION: 1 OBJECTIVE: 1 2. Which of the following conditions distinguishes monopolistic competition from perfect competition? 3. If existing fast-food firms realize sizable economic profits in the short run, the demand curves of existing  firms will 4. When a monopolistically competitive firm raises its price, 5. There are several reasons why demand curves may become more elastic. Among them are  a. the market becomes more monopolistic and cross elasticities approach zero. b. the goods become less differentiated and more firms enter the industry. c. consumers have fewer substitutes and firms drop out of the industry. d. industry demand increases and consumers increase spending. ANSWER: b the goods become less differentiated and more firms enter the industry. SECTION: 1 OBJECTIVE: 1
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2 Chapter 17/Monopolistic Competition 6. Which of the following is a characteristic of oligopoly or monopolistic competition, but  not  perfect  competition?
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