Assumptions of the theory of monopolistic competition

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1. a) What are the assumptions of the theory of monopolistic competition? In what way do these assumptions differ from of the perfectly competitive model?

b) What is meant by barriers to entry in the monopoly market?

2. a) Explain the difference between total utility and marginal utility.

b) What is the concept of the equimarginal principle?

3. a) List and describe three factors that are relevant to the determination of price elasticity of demand.

b) Describe what cross elasticity of demand measures.

c) Comment on the truth or falsity of each of the following statements:

i. The rice growers can increase their revenues by raising price.

ii. The owner of a car shop can increase their revenues by raising price.

Reference no: EM132526561

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