Use the Following to Answer Questions

question 83

Multiple Choice

Use the following to answer questions:
Figure: The Demand Curve for Crossings
-(Figure: The Demand Curve for Bridge Crossings) Look at the figure The Demand Curve for Bridge Crossings. Demand is price_____ between $0.90 and $1.10, since total revenue _____ when the price _____.

• A) elastic; increases; decreases
• B) inelastic; stays the same; decreases
• C) unit-elastic; stays the same; increases
• D) inelastic; increases; increases

Understand the concept of imperfect competition and its variants, including monopolistic competition and oligopoly.

Understand the concept of product-variety and business-stealing externalities in monopolistic competition.

Recognize the characteristics of long-run equilibrium in monopolistically competitive markets, including price, average total cost, and marginal cost relations.

Identify conditions of efficient scale operation and excess capacity in firms.

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