Question

o graph of perfectly competitive firm (prices and quantities) in the Zero price competition

Answer 1

In perfectly competitive market; there is full information about the market among its participants, no barriers to enter or exit, firms produce homogeneous products and firms are price takers means as there are very large number of buyers and sellers of the homogeneous goods, each individual firm cannot influence the price implies there is zero price competition. the following graph shows how market price is determined in a perfect competition setup with market forces of demand and supply deriving the equilibrium price and quantity and also long-run equilibrium is always at price equals average costs, eliminating entry of new competitors as no firm would like to enter in a market with zero profits.