Homework Answers
Ans) Perfectly competitive market is where there are many sellers selling homogeneous products. Since neither the buyers nor the sellers are big enough to influence the market individually, forces of demand and supply decide the price. That is, firms are price takers.
For a Perfectly competitive firm ,P = MR. And a Perfectly competitive firm produces the quantity where MR and MC curve intersect.
In long run, a Perfectly competitive firm will always earn zero economic profit. That is, P= ATC. There is one special characteristic of Perfectly competitive firm, it is that it produces at minimum of ATC in long run.
Option b.
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