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fixed and variable costs in the short run

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1. Do you think the overall level of R&D would increase or decrease over the next 20 to 30 years if the lengths of new patents were extended from 20 years to, say "forever"? What if the duration was reduced from 20 years, to say, 3 years? Which situation would create more monopoly power in the market?

2. How does monopolistic competition differ from a) pure competition; b) pure monopoly; c) oligopoly? Explain fully what product differentiation entails.

3. Which following antipollution programs should be undertaken by the government? Explain your answer?

The following table shows the total costs and total benefits in billions for four different antipollution programs of increasing scope:

Program Total Cost (in Billions Total Benefit (in Billions)

A--------------------------- $3 --------------------------------------- $7

B---------------------------- 7 --------------------------------------- 12

C---------------------------12 --------------------------------------- 16

D---------------------------18 --------------------------------------- 19

4. Distinguish between fixed and variable costs in the short run.

Classify the following as fixed or variable costs:

a. Advertising expenditures

b. Fuel

c. Raw material cost

d. Real estate taxes

5. What effect would a rule stating that university students must live in university dormitories have on the price elasticity of demand for dormitory space? What impact might this in turn have on room rates?

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Monopolistic competition is examined.

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Question 1
I think that the overall level of R&D will increase over the next 20 to 30 years if the lengths of new patents were extended from 20 years to 'forever.' However, if the duration was reduced from 20 years to 3 years, the overall level of R&D will decrease over the next 20 to 30 years. The first situation - increase of the lengths of new patents were extended from 20 years to 'forever' - would create monopoly power in the market.

Question 2
Monopolistic competition is a market structure where in many producers in competition with one another sells products which are substitute from the products offered by competitors. These means that these ...

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