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Compare the elasticity of the monopolistic competitor's demand with that of a pure competitor and a pure monopolist. Assuming identical long-run costs, compare graphically the prices and outputs that would result in the long run under pure competition and under monopolistic competition. Contrast the two market structures in terms of productive and allocative efficiency. Explain: "Monopolistically competitive industries are characterized by too many firms, each of which produces too little."

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Chapter 11

Monopolistic Competition and Oligopoly

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So, this question say, is to compare the elasticity of monopolistic competitors demand with that of a pure competitors, er on a pier monocle monopolist. So as you mean the identical long run cost compared graphically the prices on the outputs that results in the long run on that pier competition on on the monopolistic competition on contrast, the to market structures in terms of productive and allocated efficiency, unexplained monopolistic lee competitive industries and carrots characterized by too many firms, each of which produces truly through. So, first of all, since the multiplier is a factor of proportionality that brings encyclical change in national income due to an initial changing the automatic spending argument demanding supply so with high value of simply simple multiplier. The changing the agreed man results in the large impacts in the national income and therefore the economic will be unstable. So with the low value of simply, um, multiplier, the change in the spending will give a small change in the output on the economic we must table. So the formula to calculate simple multiplier is he calls toe one minus one minus marginal propensity to consume. So the proportion of income rise I spent on on consumption is what's called the embassy. So yeah, but given that embassies equals to 0.8, right, so even the multiply function this would be one invented by a woman, a 0.8 and then multiply, or because too one divided by 0.2, which is the cost of five. So therefore, the government's. The government spending is a cost to five bilion. So now, since the embassy is 0.8 on 80% off tax to be spent, the tax called to be close to their 0.8 multiplied by tax courts is equals to five. So therefore the tax codes, well, because 25 divided by 0.8, which is equals to 6.25 So therefore the tax court, because to 6.25 bilion. So that's the answer now. The reason we're behind the differences is that the whole tax is no Spain's, but some of it is saved, so the possible combination could be the increase in the government. Spending off one bilion on the tax cuts off five billion. So the reason for the difference is that the whole tax is no Spain's, but some office is saved on the possible combination could be the increase. The government spending off $1 billion on the tax courts off $5 billion So that's the answer.

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