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PRODUCT DIFFERENTIATION Product differentiation describes a situation in which there is a single product being manufactured by several suppliers, and the product of each su
FUNCTIONS OF CENTRAL BANK Economists and financial experts lack in unanimity about the functions of a central bank. According to Kisch and Elkin, the essential function of a c
Two firms are engaged in Bertrand competition. Both firms have a stable marginal cost of €7. Presently, every firm is allocated half the market. There are 10,000 people in the popu
Cross-elasticity is the measure of responsiveness of demand for a commodity to the changes in price of its substitutes and complementary goods. For example, cross-elasticity of dem
(i) Do the laws of economics still work today? (use the case discussed in class to answer this question or any other examples) (ii) Provide examples of three factors that can sh
Assumptions of Monopolistic Competition Monopolistic competition as the name implies, combines features from both perfect competition and monopoly. It has the following featu
manual problems solution of demand theory
LONG RUN OUTPUT In the LR whether or not the firm makes profit will depend on the conditions of entry. For example, when surplus profits exist, there will be new entrants bec
Measuring Point Elasticity on a Linear Demand Curve To explain the measurement of point elasticity of a linear demand curve, let's suppose that a linear demand curve is given b
The most significant uses of the price elasticity of demand, used specifically in business decision-making. It refer to the relationship between price elasticity and the marginal c
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