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What are the assumptions of perfect competition and what do they imply about the firms’s profits...

What are the assumptions of perfect competition and what do they imply about the firms’s profits in the short and long run?

b) What is the rationale for a firm under perfect competition to i) shut down? and to ii) exit? Defend your answer with an example.

c)  Suppose the inverse demand function for a monopolist’s product is given by, P=12-2Q. What is the associated price and marginal revenue if the firm wishes to sell 4 units?

d) Draw a graph to show a monopolistic firm that is making zero profits. Is this an efficient price quantity combination? Why or why not? Defend your answer.

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