Free-Response Questions

  1. Question

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    The hot dog stand industry in Frankland is monopolistically competitive. A typical stand produces and sells 10,000 hot dogs during the summer season. For that stand, the price per hot dog is $3.00, the average total cost is $1.00 at the current production level, and the marginal cost is $0.50 at the current production level.

  2. Question

    The following diagram shows the pricing strategies and payoffs for the two bubble gum firms in town.

    image
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