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17. Market power a. is the capability to increase price without losing all sales. b. exists whenever the firm faces a downwar
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17) select E. All these options are correct because market power is the power to charge a price that does not result in using all the consumers similar to the case in perfect competition. Because of this the demand is downward sloping and that market power increases with demand becoming inelastic

18) select B. Lerner index is the reciprocal of the absolute value of elasticity of demand. Since elasticity of demand is 3 in this case lerner index will be 1/3.

19) select B. Otherwise there are wide differences between monopolistic competition and monopoly. However because they both are imperfectly competitive, they have a demand function

20) select A

21) select B

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