Question

Please show how you arrived to your answer! Show all work.

Number 8 is suppose to say revenue not review. **

7) What is the defining characteristic of pure/perfect competition? What does this mean for an individual firm's and consumer's ability to impact prices? 8) What does marginal review equal at the profit-maximizing output in perfect competition? 9) What is larger: producer surplus or profit? Why? 10 From the firm supply curves, find the market supply Price Firm 2 Firm 3 Market Supply 0 3 4 11) In a perfectly competitive market, what is the long-run profit of each firm? 12) In the long-run, on who does the full burden of sales taxes fall? 13) What percent of the total surplus goes to a monopolist with first-degree price discrimination? 14) A monopolist has the cost function TC(y) 200y15y and faces the demand function 4 p = 1200-10y. What output maximizes its profit? What is the profit-maximizing price? What is its maximal profit?

Answer 1

7.

The defining characteristic of the perfect competition is that firms are price takers in the market. It is the characteristic, with no any other market. It makes consumers able to set the price and have all bargaining rights. Firms have no bargaining rights. If the price is less than average variable cost, then they can shut down and go out of the market.

8.

Marginal revenue equal marginal cost for a profit maximizing output in a perfect competition.

9.

It is the profit in the short run. In long run, profit becomes zero.

10.

11.

It is zero profit for each firm in the long run.

12.

It is the sellers who take the full burden of sales tax .

Pl. repost other unanswered questions for their proper answers!