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(a) In this chapter we use models of monopolistic competition. In what sense do such model incorporate elements of monopoly? And where does the competition
(a) In this chapter we use models of monopolistic competition. In what sense do such model incorporate elements of monopoly? And where does the competition come in? (b) Why is the multiplier derived in section 12.1 only Keynesian" and not Keyne- sian? (c) Explain why we must assume the existence of positive fixed cost of production in the monopolistic competition model with free entry or exit of firms
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