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Question
Product differentiation makes the demand for a monopolistically competitive firms product
a. perfectly elastic.
b. less elastic than in a competitive market.
c. more elastic than in a competitive market.
d. perfectly inelastic.
e. less elastic than that of a monopoly.
Answer
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Suppose Solomon lives in a community with no price controls. What do you expect will happen if his town borders a community where there is a binding price ceiling on most products?
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