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3) Explain graphically, at what point the firm should stop hiring worker in a perfect competitive...

3) Explain graphically, at what point the firm should stop hiring worker in a perfect competitive market form. Also, list down some of the characteristics of the market form.

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Answer #1

First we go through different market form then we will move towards the graph.

We have 4 different form of market

  1. Perfect competitive market - here we have large number of buyers and sellers a single buyer or seller can't influence the market at all and this is the market for homogenous products and prices is determined by demand and supply.
  2. Monopolistic competitive market - here products are slightly different from one another and that creates huge difference in perception of product by the buyer. As they are the same product but difference lies in quality, appearance, fragrance, packing etc
  3. Monopoly market - in monopoly market we have single seller who influences the price of product and their is a entry barriers for this market.
  4. Oligopoly market - here 2 or more companies come together and drivers the market without competition amoung them.

In perfect competitive market firm stops hiring employees when marginal revenue equals marginal cost that means marginal revenue of hiring one more employee is zero.

Actually in perfect competitive market demand for worker increase as their is increase in demand for products and vice a versa.

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