Question
Apply the Principle: Week 5 In the video on Oligopoly and Monopolist Competition Sal creates the following graph: Very
Diiferent Degree of
Product
Differentiation 0
1 A bunch
Number of Competitors Problem 1: Using Sal’s grid system select four firms which fall between perfectly competitive
and monopoly. Explain why you conclude that the firm fits ‘nearly perfectly competitive:’
monopolistic competitive; oligopoly; or, monopoly using the degree of product differentiation
and the number of competitors in the market. (15pts)
Problem 2: Now for each of the firms, explain to what degree are they able to raise their price. Is
it within a small band around those of similar products or does the firm have lots of control over
what price it choose to charge? Explain what this means about the slope of the firm’s demand
curve? (15pts)
