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ECON101 : Monopolistic Competition

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  • Course Code: ECON101
  • University: University Of Waterloo
  • Country: Canada

Question:

1). Explain why governments may want to set the price charged by natural monopolies at the level where the demand curve cuts the average total cost curve.
2). Why can a firm operating in monopolistic competition make an economic profit in the short-run? Under what circumstances can a firm operating in monopolistic competition make an economic profit in the long-run?
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