Answer the following statements true (T) or false (F)

1. As more firms enter a monopolistic competitive industry, average revenue will fall for existing firms.
2. In an oligopoly, the pricing policy of each firm is independent of that of other firms.
3. A kinked demand curve results when one firm’s price changes are followed downward but not upward by competing firms.
4. In the long run, economic profits tend to be eliminated under conditions of monopolistic competition.
5. Predatory pricing involves charging different customers different prices for the same good.


1. TRUE
2. FALSE
3. TRUE
4. TRUE
5. FALSE

Economics

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