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Q1. i) Illustrate what price will the monopolistically competitive firm charge in this market?
ii) Illustrate what are the profit-maximizing price, quantity, and resulting profit?
iii) Explain how more consumer surplus will be derived from the purchase of this product at the monopolistically competitive price?
iv) Explain how more profit will the monopolistically competitive firm earn in this situation?
v) Explain how more output will the monopolistically competitive firm produce in this situation?
Q2. If markets have multiple equilibria, some may be more desirable than others, and public policy may help attain the desirable ones. Elucidate using the example of multiple equilibria in the labour market. Illustrate diagrammatically
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