Question

Explain your reasoning and write legibly a. Why are perfectly competitive firms price-takers? Choose one industry...

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 ATC curve in this location in long run equilibrium? What will happen if ATC<P ? Why is this impossible in the long run?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Ans

Because there are too many producers. If it raises price it looses all customers since products are identical. Similarly if it lowers price it does not affect quantity sold by others by too much since fall in demand is shared by too many firms such that their is negligible effect on them. Unpack aged milk is close to perfect competition because there are too many buyers and sellers. The product is similar. Perfect information assumption is unrealistic as it is hardly found in real world

2

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You are a producer in a constant-cost perfectly competitive industry. Your long-run total, marginal, and average...
You are a producer in a constant-cost perfectly competitive industry. Your long-run total, marginal, and average costs are given by TC = 2Q² + 128, MC = 4Q, and ATC = 2Q+ (128/Q). What is the long-run equilibrium price?
1. Describe the nature of perfect competition. What is a perfectly competitive market and industry? Provide...
1. Describe the nature of perfect competition. What is a perfectly competitive market and industry? Provide a detailed discussion. 2. Explain what is meant by a price-taking producer and a price-taking consumer. How does this relate to perfect competition? 3. What is meant by free entry and exit? Provide a realistic example.
Explain why in the long run, perfectly competitive firms will make no profit. What is the...
Explain why in the long run, perfectly competitive firms will make no profit. What is the long run equilibrium condition for a firm? ( first assume firm are making positive profits and then assume some firms are making negative profits... graphs).
Suppose there are 1000 firms in the perfectly competitive shrimp industry. All firms are operating at...
Suppose there are 1000 firms in the perfectly competitive shrimp industry. All firms are operating at their most efficient scale (i.e., they have expanded to take advantage of any economies of scale). All firms have the same technology and costs. All firms are producing the quantity that maximizes profit. Each firm produces 3000 pounds of shrimp a year and has average total cost (ATC) of $13 per pound. The market price of shrimp the firms receive is $10 per pound....
Why will profits for firms in a perfectly competitive industry tend to vanish in the long...
Why will profits for firms in a perfectly competitive industry tend to vanish in the long run?
Choose the single best answer, explain your reasoning, and illustrate with graphs. World wool consumption has...
Choose the single best answer, explain your reasoning, and illustrate with graphs. World wool consumption has been declining and has caused a long-term decline in wool production in Australia. Assume that the wool industry in Australia is perfectly competitive and consists of firms with U-shaped long-run average cost curves. Suppose the industry was originally in long-run equilibrium. Now consider a permanent downward shift in demand for wool. Assume this is a constant cost industry. We can expect that in the...
25. Why will profits for firms in a perfectly competitive industry tend to vanish in the...
25. Why will profits for firms in a perfectly competitive industry tend to vanish in the long run? 26. Why are generic pharmaceuticals significantly cheaper than name brand ones?
Assume that the market for fertilizer is perfectly competitive. Firms in the market are producing output...
Assume that the market for fertilizer is perfectly competitive. Firms in the market are producing output but they are experiencing economic losses. Explain how ATC, AVC and MC are related (Note: the relationship of these cost curves is same whether there is loss or profit). Explain how the price of fertilizer compares to the ATC, AVC and MC of producing fertilizer Draw two graphs side by side illustrating the present situation for the single firm and the entire market. Cleary...
explain why an imperfectly competitive firm cannot achieve a perfectly competitive long run equilibrium
explain why an imperfectly competitive firm cannot achieve a perfectly competitive long run equilibrium
Assume that a perfectly competitive, constant cost industry is in a long run equilibrium with 60...
Assume that a perfectly competitive, constant cost industry is in a long run equilibrium with 60 firms. Each firm is producing 90 units of output which it sells at the price of $41 per unit; out of this amount each firm is paying $3 tax per unit of the output. The government decides to decrease the tax, so the firms will be paying $1 tax per unit. a) Explain what would happen in the short run to the equilibrium price...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT