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5. In the monopolistic competition model if b increases what will be the effects on prices and number of firms? 30 points Hint: The two

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5. In the monopolistic competition model if b increases what will be the effects on prices and number of firms? 30 points Hint: The two basic equations in this model are: P=c + 1 / (b x n) and AC = n x F/S + c ; where c = marginal cost, F. = fixed cost and S = sales of one firm and n = number of firms

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