MICROECONOMICS EXAM 2 ESSAYS CHAPTER 7-11 TOTAL 20 POINTS

1. Why does the short-run marginal cost curve eventually increase for the typical firm?

1. Explain what allocative efficiency is and how it is achieved in pure competition?

1. How does price elasticity affect the price-quantity combination and segment of the demand curve that the monopolist would prefer for price and output?

1. Why is the monopolistic competitor’s demand curve more elastic than a pure monopolist’s, but less elastic than a pure competitor’s? What factors determine the price elasticity of demand for a monopolistic competitor?