Question

1. List the characteristics of a perfectly competitive market. Give an example. Why do firms in perfectly competitive markets
0 0
Add a comment Improve this question Transcribed image text
Answer #1

Q1.

there are following characteristics of perfect competition

1. they are price taker

2. there are many sellers and buyers

3. free entry and exit

4.Homogenious product

5.perfect Knowledge about market.

why do firms have no control?

in perfect competition, products are homogenous and any firm can enter easily. and everyone has perfect Knowledge about market so, it is impossible to charge price whatever the firm wants as if they will charge high price costumer have many other option.

if we talk about elasticity of demand, competitive firm has perfectly elastic demand. so, when there is perfectly elastic demand we can not charge the price beyond the market price as no one will buy at this price.

Add a comment
Know the answer?
Add Answer to:
1. List the characteristics of a perfectly competitive market. Give an example. Why do firms in...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Mike has a part-time job and earns $50 per week. He spends his entire income on...

    Mike has a part-time job and earns $50 per week. He spends his entire income on two goods: Hamburgers (which cost $2 each) and movie rentals (which cost $3 each). Draw Mike's budget constraint. Suppose that Mike decides to purchase 10 hamburgers and rent 10 movies this week. Is this choice within Mike's opportunity set? Show this choice on your graph.

  • a. Give three characteristics of a perfectly competitive market. [3 marks] b. List and explain three...

    a. Give three characteristics of a perfectly competitive market. [3 marks] b. List and explain three types of barriers to entry that may be used in a monopoly. [3 marks] c. For a monopolist, why is marginal revenue less than price for every level of output except the first? [4 marks] d. Give the conditions which should exist for price discrimination? [3 marks] e. Draw a diagram to show the long run equilibrium condition of the perfectly competitive firm [4...

  • 9. The market for pizza is perfectly competitive and has 1,000 firms. Each firm is identical....

    9. The market for pizza is perfectly competitive and has 1,000 firms. Each firm is identical. Describe each firm in long-run equilibrium. In long-run equilibrium, each firm is - O A. making zero economic profit OB. making positive economic profit C. incurring an economic loss OD. just covering total variable cost ID: 12.4 Test B 3 10. There are five firms in a market and the market shares of the firms are 35 percent, 25 percent, 20 percent, 15 percent,...

  • Question 28 2 pts Why do perfectly competitive firms sell their products only at the market...

    Question 28 2 pts Why do perfectly competitive firms sell their products only at the market price? Firms can sell their goods above the market price because firms are considered price takers. If a firm charges more than other firms, it will sell nothing; it has no incentive to sell at a lower price. Firms can sell their goods above the market price because firms are considered price makers. If a firm charges less than other firms, it will be...

  • The figure below provides the cost curves for a firm in a perfectly competitive market. If...

    The figure below provides the cost curves for a firm in a perfectly competitive market. If the price market price is $16, what is the profit maximizing level of output for the firm? How much profit does this firm earn at this level of output? Given your answer in part a, explain what will happen to this industry in the long run. Jim recently quit his part time job (working 15 hours per week making $8 per hour) and opened...

  • 1. In a perfectly competitive market, ________. a. Group of answer choices b. bargaining over prices is a common phenome...

    1. In a perfectly competitive market, ________. a. Group of answer choices b. bargaining over prices is a common phenomenon c. there are restrictions on the entry of new firms d. sellers produce identical goods e. each seller charges a different price for its product 2. John is a tomato farmer and sells his crops in a perfectly competitive market at the price of $1 per pound. John wants to increase his farm revenue, ________. a. so he would need...

  • cardboard boxes are produced in a perfectly competitive market. each identical firm has a short run...

    cardboard boxes are produced in a perfectly competitive market. each identical firm has a short run total cost curve of TC= 3Q^3 - 12Q^2 +16Q + 100, where Q is measured in thousands of boxes per week. calculate the output for the price below which a firm in the market will not produce any output in the short run. ( i.e., the output for the shut down price) a 2^1/2 b. 2 c. 1/2 d. 1/square root of 2 2)...

  • Consider a perfectly competitive market for titanium. Assume that all firms in the industry are identical and...

    Consider a perfectly competitive market for titanium. Assume that all firms in the industry are identical and have the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. Assume also that it does not matter how many firms are in the industry Tool Tip: Place the mouse cursor over orange square points on the MC curve to see coordinates. COST PER UNIT IDollars per pound) 10 MC ATC AVC 0 5...

  • 17. The market is perfectly competitive and your business is considered to be profit maximizing. Your...

    17. The market is perfectly competitive and your business is considered to be profit maximizing. Your business earns economic profits of $1500. The foxed costs of your business decrease from $500 to $450. This means your business will b C a reduce its output raise is price eam a greater profil d. earn a smalier profit 18. Sebastian has the choice of working as a grocery store stocker ($12/hour) or washing windows for local businesses ($4 per window). He doesn't...

  • 4. Suppose 1,000 identical suppliers of bottled water operate in a perfectly competitive market. The market...

    4. Suppose 1,000 identical suppliers of bottled water operate in a perfectly competitive market. The market demand for their water is given by the equation: Q-10,000-200P, or P-50-.005Q where Q is the number of gallons of water demanded each day by consumers of bottled water, and Pis the price per gallon a. If the marginal cost to each supplier was constant at $I per gallon, how many gallons of water would sell in this market? How many would each supplier...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
Active Questions
ADVERTISEMENT