(a) Why are firms operating under perfectly competitive market said to be a ‘price taker’? What...
Homework Answers
Answer -
a) No any firm in a perfectly competetitve market can decide the
price of product they sell.The price of goods and services will be
determined by the demand and supply forces in the market.No one
firm can control the price.All firms accepts only the price which
issis determined in thebthe market.so they are called only a price
taker and not a price maker.
Because of this a perfectly competetitve firm faces a demand curve
horizontal straight line equal to the price determined by demand
and supply forces in the market.The curve is horizon because there
is no change in price of the product.
b) Firms oprating under perfect competetion earn zero economic profits as all firms are only price takers ,they can maximising profits by producing only where price equals to marginal cost of products.Secondly there are entry barriers to the firms preventing the firms earning positive or negative economic profits.
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(a) Why are firms operating under perfectly competitive market
said to be a ‘price taker’? What...
(a) Why are firms operating under perfectly competitive market said to be a ‘price taker’? What...
(a) Why are firms operating under perfectly competitive market said to be a ‘price taker’? What impact does this have on the firm demand curve? (4 marks) (b) “Firm operating under perfect competition can only earn zero economic profit in the long run" Discuss this statement (6 marks)
In the long run, all of the firms in a perfectly competitive industry will: exit the...
In the long run, all of the firms in a perfectly competitive industry will: exit the industry if price is greater than average total cost. produce at an output level at which average total cost equals marginal cost. earn an economic profit greater than zero. O produce an output level at which price is greater than average total cost. Which statement about the differences between monopoly and perfect competition is INCORRECT? A monopoly will charge a higher price and produce...
TRUE OR FALSE TF DO 1. In a price-taker market, all firms produce an identical product...
TRUE OR FALSE TF DO 1. In a price-taker market, all firms produce an identical product and each firm comprises only a very small portion of the total market. 2. If a price-taker firm wants to sell its output, it must accept the market price, but it can sell as much output as it wishes at that market price. O N 3. For a price-taker firm, its marginal revenue from the sale of an addi- tional unit is generally less...
QUESTION 7 Monopolistic competitive firms in the long run earn: positive economic profits. zero pure economic...
QUESTION 7 Monopolistic competitive firms in the long run earn: positive economic profits. zero pure economic profits. negative economic profits. Positive, zero, or negative economic profits. QUESTION 8 Which of the following statements best describes firms under monopolistic competition? Profits will be positive in the long run. Price always equals average variable cost. In the long run, positive economic profit will be eliminated. Marginal revenue equals minimum average total cost in the short run. QUESTION 9 Which of the following...
TU) UdlIT IS. In a perfectly competitive market: each firm produces a unique product and chooses a price that maximize...
TU) UdlIT IS. In a perfectly competitive market: each firm produces a unique product and chooses a price that maximize there are very few firms, and each controls a large segment of the market. entry into the industry is restricted in the long run. there are many relatively small firms, and each firm is a price-taker. c. t If a firm is a price-taker, it: sells its product at the price determined by the market. sells its product at the...
1)An example of a perfectly competitive firm would be Dannon Yogurt a grain farmer a car...
1)An example of a perfectly competitive firm would be Dannon Yogurt a grain farmer a car manufacturer a drug company 2) In the long run the profit for a Perfectly competitive firm is theoretically ["zero", "small", "large", "negative"] because of ["competition", "lack of competition", "good cost controls", "poor cost controls"] 3)in the short run a P.C. industry will see ["entries and exits", "entry only", "losses", "only exits"] to/from the market based on ["positive profits to firms", "profits and losses to...
are making an economic Today, firms in a perfectly competitive market run, firms will profit. In...
are making an economic Today, firms in a perfectly competitive market run, firms will profit. In the long firns in a perfectly competitive market are making the market until all firms in the market onomic e) exit, producing at the minimum point on their long-run average cost d) a) exit; covering only their total fixed costs b) enter, making zero economic profit enter, making zero normal profit an economic profit when new firms enter 46. The firms in a perfectly...
1. Which of the following best explains why the number of firms is fixed in the...
1. Which of the following best explains why the number of firms is fixed in the short run in perfect competition? Marginal costs are too high to allow firms to operate profitably. Firms would wait to see how the long run develops. Capital is fixed in the short run. Firms would never want to enter a perfectly competitive industry. 2. Which of the following best explains why the number of firms is fixed in the short run in perfect competition?...
Now that you have studied monopolistic competition, let's see how well you can distinguish a firm in a monopolistically competitive market from a firm in a perfectly competitive market. Given the description of the firm below, decide whether it applies to
Now that you have studied monopolistic competition, let's see how well you can distinguish a firm in a monopolistically competitive market from a firm in a perfectly competitive market. Given the description of the firm below, decide whether it applies to monopolistic competition, perfect competition, or both. You may have to adjust the scroll bar to see the complete list.Items (9 items) (Drag and drop into the appropriate area below)a firm that may earn an economic profit or loss in the short...
1. A single firm in a perfectly competitive market is a price taker? True or False....
1. A single firm in a perfectly competitive market is a price taker? True or False. Explain with examples. 2. What is the supply curve of a perfectly competitive firm? Is it different from that of the market supply curve? Explain. 3.If a firm makes a loss in the short run, then it would shut down? If no, discuss. If yes, discuss.Offer examples 4. Does the monopolist have a supply curve? Discuss
In the long run, all of the firms in a perfectly competitive industry will: exit the industry if price is greater than average total cost. produce at an output level at which average total cost equals marginal cost. earn an economic profit greater than zero. O produce an output level at which price is greater than average total cost. Which statement about the differences between monopoly and perfect competition is INCORRECT? A monopoly will charge a higher price and produce...
TRUE OR FALSE TF DO 1. In a price-taker market, all firms produce an identical product and each firm comprises only a very small portion of the total market. 2. If a price-taker firm wants to sell its output, it must accept the market price, but it can sell as much output as it wishes at that market price. O N 3. For a price-taker firm, its marginal revenue from the sale of an addi- tional unit is generally less...
TU) UdlIT IS. In a perfectly competitive market: each firm produces a unique product and chooses a price that maximize there are very few firms, and each controls a large segment of the market. entry into the industry is restricted in the long run. there are many relatively small firms, and each firm is a price-taker. c. t If a firm is a price-taker, it: sells its product at the price determined by the market. sells its product at the...
are making an economic Today, firms in a perfectly competitive market run, firms will profit. In the long firns in a perfectly competitive market are making the market until all firms in the market onomic e) exit, producing at the minimum point on their long-run average cost d) a) exit; covering only their total fixed costs b) enter, making zero economic profit enter, making zero normal profit an economic profit when new firms enter 46. The firms in a perfectly...
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