# For the monopolistically competitive firm a price p

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Chapter 26 / Exercise 2
Bennett/Siy
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40) For the monopolistically competitive firmA) Price (P) = Marginal Revenue (MR) = Average Revenue (AR).B) P= MR> ARC) P= AR> MRD) P> MR= ARAnswer:
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C41) The Jeans Store sells 7 pairs of jeans per day when it charges \$100 per pair. It sells 8 pairs of jeans per day at a price of \$90 per pair. The marginal revenue of the eighth pair of jeans is
A62) Suppose that if a local McDonald's restaurant reduces the price of a Big Mac from \$4.00 to \$3.25, the number of Big Macs it sells per day will increase from 4 to 5. Explain the output effectand the price effect resulting from this change. Using a graph, illustrate both the loss in revenue from selling each of the first 4 Big Macs for \$0.75 less and the additional revenue from selling 1 more Big Mac. What is the total change in revenue received which results from this price decrease?
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Chapter 26 / Exercise 2