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Monopolistic Competition. Assume a market with differentiated products. (a) How does monopolistic competition eliminate economic profit in the long rung? (b) What can be said

Monopolistic Competition. Assume a market with differentiated products.

(a) How does monopolistic competition eliminate economic profit in the long rung?

(b) What can be said of the technical efficiency or scale of production?

(c) Why does monopolistic competition come with a loss of welfare (dead-weight loss 0 compared to the perfectly competitive market?

(d) Advertisement is costly. Why do firms nevertheless engage in advertising?

(e) What are possible disadvantages of advertisement to consumers?

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