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As you may recall from the readings, money demand rises when the price level rises because people will need more money to make their everyday purchases. For example, if the price index rose from 100 to 140.
Use this increase to calculate how many extra dollars an individual will need to buy the following:
a. Fifteen gallons of gas that initially sold for $1.24 per gallon.
b. An apartment that originally rented for $900 per month.
c. A movie ticket that initially cost $7.
(a) What is the market clearing Bertrand price and quantity?
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a. Define the Bertrand model and its assumptions. Explain why the model predicts the perfectly competitive outcome despite the number of sellers. Discuss the limitations of the model.
Construct a numerical example to show that as marginal product (MP) rises, marginal cost (MC) falls. Explain your answer and use tables and graphs to illustrate.
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