Saturday, December 23, 2006

Basic Micro Questions

Oligopoly and Monopolistic competition markets seem to assume either Constant Marginal Cost or zero Marginal Cost. Is there an economic reason for it or is it simply mathematical ease? We do not assume something like that with Perfectly Competitive markets. We always have a normally shaped MC curve. Are the aggregate of firm demand curves and market demand curves the same? They are different for the Supply curves because of the input price effect, and a similar effect does not apply with demand curves. So technically the market demand curve and the aggregate of the firm demand curves are the same. Can any individual firm demand curve be more elastic than the market demand curve? Why or why not?
Could someone give me answers to these questions?

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