Question

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AutoSave 0 2 0 R = Final20 O File Home Insert Design Layout References Mailings Review 20. Provide two examples of companies operating in perfectly competitive markets. Search View Help surjelis jimenez - Share 27. If a firm's revenues exceed its variable costs but does not cover its fixed costs, then the firm should 28. Book publishers that heavily discount unsold printed books is an example of the publisher trying to recover what type of costs? 29. In a perfectly competitive market, the price paid by a customer for a good or service is a) Far from the cost of production b) Close to the cost of production 30. A pharmaceutical company whose main products are still protected by patents are most likely to operate as a a) Oligopoly b) Monopoly A o tom # 00 2:49 PM 8/2020 Type here to search

Answer 1

27.

If the firm could cover the variable cost but not the total fixed cost and that its revenue is greater than the variable cost, the firm should not shut-down as shutting down would cause it to incur loss equal to total fixed cost. If it remains operational, it can cover the whole of variable cost and a portion of total fixed cost.

28.

If a firm tries to sell its product at heavy discount. It is said to be recovering the fixed cost and a portion of variable cost.

29.

It shall be noted that under perfect competition, the price is given as determined by the market forces of demand and supply.

The firm and consumer are price taker.

The price that the consumer pays is close to cost of production. This is because, the firm does not earn any profit other than the normal profit in perfect competition. Thus, the correct answer is b) Close to cost of production

30

The question state about one pharmaceutical company. It is given as being protected by patents.

So, this decribes a market where there is monopoly firm. There is no other firm in the market of the products in which this pharma company has the patent rights.

Hence, the correct answer is b) Monopoly