Question

4. Graphically illustrate a perfectly competitive firm and a non-perfectly competitive firm side by side. Explain the differences. 5. Illustrate graphically a monopolistic competitive firm at a above normal, normal and zero economic profit. (Three separate graphs)

Answer 1

Sol :

perfectly competitive firm has Constant Price . And In this case , price is equal to Average Revenue . And , AR is equal to MR .

YA Ac Price AC Price ($) ? P MR=AR 9 MRl-u) Quantit quantity tity Perfectly Comp firm Monopoly of Monopolistic

Non perfectly competitive competition has decreasing Marginal revenue and Average revenue . And , MR decreases faster than AR.

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