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Chapter 16 Exercises 1- 5. Monopolistic Competition. Gregory Mankiw. Principles of Economics.
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1. Among monopoly, oligopoly, monopolistic competition, and perfect competition, how would you classify the markets for each of the following drinks?
2. Classify the following markets as perfectly competitive, monopolistic, or monopolistically competitive,and explain your answers.
3. For each of the following characteristics, say whether it describes a perfectly competitive firm, a monopolistically competitive firm, both, or neither.
4. For each of the following characteristics, say whether it describes a monopoly firm, a monopolistically competitive firm, both, or neither.
5. You are hired as the consultant to a monopolistically competitive firm. The firm reports the following information about its price, marginal cost, and average total cost. Can the firm possibly be maximizing profit? If not, what should it do to increase profit? If the firm is profit maximizing, is the firm in a long-run equilibrium? If not, what will happen to restore long-run equilibrium?