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Perfect Competition and Monopolistic Competition
A. List the features of an industry that has perfect competition, and compare these with the features of an industry with monopolistic competition.
B. How do firms in an industry with perfect competition act differently from firms in an industry with monopolistic competition?
C. Draw the graphs for a perfectly competitive firm and a monopolistically competitive firm that are operating in the short run. What are the similarities and differences?
D. Draw the graphs for a perfectly competitive firm and a monopolistically competitive firm that are operating in the long run. What are the similarities and differences?
Please explain what is meant by the term informational asymmetries. What problems can these asymmetries create for participants in the money and capital markets and the financial system?
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