Chapter 12
1) What are the requirements for perfect competition?
2) Define the shutdown point. Explain why the firm shuts down in the short run if the price falls below this point.
1)
2)
Chapter 12 1) What are the requirements for perfect competition? 2) Define the shutdown point. Explain...
Chapter 12 1) What are the requirements for perfect competition? 2) Define the shutdown point. Explain why the firm shuts down in the short run if the price falls below this point. 3) In the long run, perfectly competitive firms cannot make an economic profit. Why? 4) Describe how economic losses are eliminated in a perfectly competitive industry.
1) What are the requirements for perfect competition? 2) Define the shutdown point. Explain why the firm shuts down in the short run if the price falls below this point. 3) In the long run, perfectly competitive firms cannot make an economic profit. Why? 4) Describe how economic losses are eliminated in a perfectly competitive industry.
When do firms decide to shut down production in the short run under perfect competition? Explain carefully. The market for bread in Brooklyn, NY is characterized by perfect competition. Firms and consumers are price takers and in the long run there is free entry and exit of firms in this industry. Illustrate with the help of a graph how the individual firm maximizes profit in the short run.
The characteristics of perfect competition are: ___________________, _____________________, ________________________ ___________________, ___________________ 2. The demand curve in perfect competition is: ______________ (Shape or slope) 3. The firm operates at the quantity where _________ equals ___________. 4. Total profit is equal to ___________ minus ________________. 5. The marginal revenue curve in perfect competition is: ______________ (Shape or slope) 6. The entrance of one or two new firms (in perfect competition) does what to market price? _______________________________________, 7. For a firm to operate,...
Labour Demand with Perfect Competition in the Labour Market and Perfect Competition in the Output Market in the Long Run. You are the manager of a business that operates in perfectly competitive markets {both the Labour Market and Output Market}. The production function of the business is given by:Q =2L1/4K1/4 .The price of the product is “10”. The wage rate is “1”. The price of capital is “2”. 1. Find the use of labour and capital in the long run....
12.) Which of the following is not a characteristic of perfect competition? a. All goods sold are identical. b. Firms and consumers all have perfect information about the good and market. c. all consumers have identical individual demand curves d. Sellers can enter the market easily. 13.)For a perfectly competitive firm in the short run, if the following conditions are true, P = MR = MC > AC, then a. the firm is maximizing profits and is making an economic...
CHAPTER 8- PERFECT COMPETITION-PRACTICE PROBLEMS 2 Assume the following cost data are for a purely competitive producer Total Cost Cost 45 1 $4000 $45.00 $105.00 2 0.00 3 20.00 15.00 12.00 10.00 857 7.50 7250 6000 52.50 49.00 47 50 47.14 48.13 50.00 52.50 30 35 7.50 37.00 7.50 3.33 75 a. At a product price of $56, will this firm produce in the short run? If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output?...
1. Why can't perfect competitors make an above-normal profit in the long-run 2. What is the significance that profit maximization for the perfect competitor occurs where P = MC - MR - ATC? 3. Why don't we have a perfectly competitive system? (go over each of the requirements for perfect competition and explain why that does not occur). 4. Which of the requirements do you think is the most important reason we don't have a system of perfect competition? Explain.
Perfect Competition (Please Graph) Please explain and illustrate graphically how the diaper service market has been affected by the decrease in the North American birth rate and the development of disposable diaper. Explain the long-run and the short-run effects of the event, starting from the long run equilibrium. What happens to the price of diaper and the quantity of diaper in the market and a representative individual firm? (Show two diagrams for both market firms and an individual firm)
What is the difference between a firm’s shutdown point in the short run and in the long run? Why are firms willing to accept losses in the short run but not in the long run?