Author Question: In monopolistic competition, each firm's marginal revenue curve lies ________ its demand curve ... (Read 210 times)

drink · **on:** Jun 29, 2018

In monopolistic competition, each firm's marginal revenue curve lies ________ its demand curve because of ________.

A) below; barriers to entry
B) below; product differentiation
C) above; barriers to entry
D) above; product differentiation

Question 2

Two firms, Alpha and Beta, produce identical computer hard drives. They have identical costs, and the hard drives they produce are identical. The industry is a natural duopoly.

Alpha and Beta enter into a collusive agreement, according to which they split the market equally. If both firms comply with the agreement A) together they will operate in a way indistinguishable from a monopoly.
B) the price of a hard drive will be equal to marginal cost.
C) each firm will make zero economic profit.
D) the oligopoly will produce more hard drives than a profit-maximizing monopoly would produce.