Question

One of the assumptions of a perfectly competitive market is that firms within the industry are selling homogenous, or identical, products. Can you think of an example of an industry (not given directly in the chapter) where this is a good assumption? How does this impact competition within this industry?

Answer #1

8. Suppose that there are 100 identical firms in a perfectly
competitive industry. Each firm has a short-run total cost curve of
the form C(q) = 1/300q3 +0.2q2 + 4q + 10
(d) A perfectly competitive market has 1,000 firms. In the very
short
run, each of the firms has a fixed supply of 100 units. The
market
demand is given by
Q = 160, 000 - 10,000P
(e) Calculate the equilibrium price in the very short run.
(f) Calculate...

Why do firms within a perfectly competitive market face
perfectly elastic demand curves, while the market demand curve is
not perfectly elastic?

Consider perfect competition, briefly explain whether it is
possible for firms in a perfectly competitive market to earn zero
economic profit even if they have incurred a sunk cost upon entry
into the market. Given an example of such a cost.

Suppose that the perfectly competitive for market for milk is
made up of identical firms with long-run total cost functions given
by:
TC = 4 q3 - 24 q2 + 40 q
Where, q = litres of milk. Assume that these cost functions are
independent of the number of firms in the market and that firms may
enter or exist the market freely.
If the market demand is :
Qd = 8,000 - 160 P
1. What is the long-run...

4) In the perfectly competitive gadget industry there are 10
firms with identical costs given by C = 500 + 20q + q2, none of
which believes it can alter price. Marginal cost is given by the
function MC=20 + 2q.
a. Find the shutdown point of one of these firms. Be sure to
explain what you are doing. (5 points)
b. If price equals $400 what is the profit maximizing level of
output for an individual firm? (5 points)...

Monopolistic competition in a market is characterized by:
Select one:
a.
many firms, downward-sloping demand curves, and zero economic
profit in the long run.
Monopolistic competition is a:
Select one:
a.
group of suppliers that try to act as if they were a
monopoly.
b.
market that is dominated by a small number of firms.
c.
market with a large number of firms selling similar but not
identical products.
d.
group of suppliers that try to act as if they...

What does it mean that firms in perfectly competitive industries
are price takers? What assumptions are needed for a firm to be a
price taker?
How do firms in perfectly competitive industries determine
profit maximizing output? Include the profit maximizing rule in
your response.

Explain your reasoning and write legibly
a. Why are perfectly competitive firms price-takers? Choose
one industry that is likely to be perfectly competitive and
describe why. Which of the characteristics of perfect competition
do you find to be least realistic and why?
b. For the industry that you chose in part A, draw the long
run equilibrium graph for the global market and for an individual
producer and explain the two ways that these graphs are connected.
Why is the...

1. At what quantity does the profit-maximizing perfectly
competitive firm produce?
A. where total revenue minus marginal revenue is at a
maximum
B. where marginal revenue minus marginal cost is at a
maximum
C. where total revenue minus total cost is at a minimum
D. where marginal revenue minus marginal cost is at a
maximum
E. where marginal revenue is equal to marginal cost
2. What is the consequence of a firm selling a similar product
in a competitive market?...

Suppose a perfectly competitive market consists of identical
firms with the same cost function given by
C(q)=2q2 +3q + 400
The market demand is
QD= 5800 - 4p
How many firms will operate in this market in the long
run?
Round your answer to the nearest whole number.

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 3 minutes ago

asked 9 minutes ago

asked 23 minutes ago

asked 23 minutes ago

asked 26 minutes ago

asked 34 minutes ago

asked 34 minutes ago

asked 56 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago