We Cannot Predict the Effect on the Market Clearing Price

question 157

Multiple Choice

We cannot predict the effect on the market clearing price, but know that the equilibrium quantity will increase when

• A) supply increases and demand decreases.
• B) supply and demand for a product simultaneously decrease.
• C) supply and demand for a product simultaneously increase.
• D) supply decreases and demand increases.

Understand the conditions under which firms in monopolistic competition operate, including demand curve elasticity.

Identify examples of industries that reflect characteristics of monopolistic competition.

Understand the concept of excess capacity in monopolistically competitive markets.

Comprehend the pricing behavior of monopolistically competitive firms in the short and long run.

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