Using the model of perfect competition, explain what it means to say, “Too much electricity is generated,” or “Too little education is produced.” Would the firm be producing at the bottom of the ATC curve if too much or too little was being produced?”
Q: Perfect competition is an extremely rare type of market in the real world. This is because the…
A: It refers to a market condition in which there are a large number of buyers and sellers that are…
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Q: Using graph, explain when the firm maximizes its profit under perfect competition?
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Q: Why perfect competition considered as a price taker?
A: According to economic theory, perfect competition exists when all companies sell the same things,…
Q: Explain how the perfectly competitive firm decides whether to operate or shut down in the short run.
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A: A perfect competitive market is one there many firms offer homogenous product to a large group of…
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A: Economies of scale refers to a situation where there is fall in per unit output of average cost with…
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A: Introduction A perfectly competitive firm simply has to make one fundamental decision: how much to…
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A: Perfect competition is many sellers dealing in commodity which is same in quality and price at which…
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A: Perfect competition refers to the market structure where the number of buyers and sellers are large…
Q: In a perfectly competitive market ,why does the firm always break even in the long run ? Illustrate…
A: In perfect competition, in the very short run firms experience profits. However, new firms enter…
Q: Explain how the perfectly competitive firm decides whether to operate or shutdown in the short run.
A: There are mainly two types of costs in the process of production.
Q: True or False: The industry is in a long-run equilibrium.
A: In the perfectly competitive market structure, every firm in the market produces identical goods and…
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A: In the ‘perfect competition(PC)’ all firms sell ‘identical products’ that are homogeneous. Here all…
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A: Here, Lisette being the owner of the bakery shop experiences constant returns to scale.
Q: What does perfect competition mean and what are the concepts of it?
A: Perfect competition refers to the market structure featuring more number of sellers and buyers in…
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- What are three short-run outcomes in the perfect competition? When a firm takes the short-down decision?What are three short-run outcomes in the perfect competition?The following graph shows the demand curve, as well as the AVC, ATC and MC curves of a company selling rolled oats in a perfectly competitive market. Use the graph to answer the questions. The goal of the company is to maximize its profit. How many boxes of rolled oats should it sell to attain this goal? What price will it charge? How much profit does this firm make per month? Will this company produce or shut down in the short run? Why? Will this firm exit the market for rolled oats in the long run or not? Why?
- Explain how economics make profit or loss when firms are perfectly competitive.Assuming that the market for cigarettes is in perfect competition, what does allocative and productive efficiency imply in this case? What does it not imply?Why perfect competition is allocatively efficient, the price that people are willing to pay represents the gains to society and the marginal cost to the firm represents the costs to society.
- Does a competitive firm’s price equal its marginalcost in the short run, in the long run, or both?Explain.Assume that the plum market has lots of different farms. They are producing pretty much the same product. The plum market is very much like a perfectly competitive market. When answering this question, please use an explanation in words and the diagrams of the perfect competition model. A capitalist interested in the California plum market has asked you for an analysis. The capitalist comments, “I am guessing that plums are going to increase in popularity. What does that mean in the market?" Help this capitalist understand what might happen in this market given that plums will experience an increase in popularity. Please apply the perfect competition model. c. What happens to efficiency during these market changes? Please explain.Assume that the plum market has lots of different farms. They are producing pretty much the same product. The plum market is very much like a perfectly competitive market. When answering this question, please use an explanation in words and the diagrams of the perfect competition model. A capitalist interested in the California plum market has asked you for an analysis. The capitalist comments, “I am guessing that plums are going to increase in popularity. What does that mean in the market?" Help this capitalist understand what might happen in this market given that plums will experience an increase in popularity. Please apply the perfect competition model.
- Assume that the plum market has lots of different farms. They are producing pretty much the same product. The plum market is very much like a perfectly competitive market. When answering these questions, please use an explanation in words and the diagrams of the perfect competition model. A capitalist interested in the California plum market has asked you for an analysis. The capitalist comments, “I am guessing that plums are going to increase in popularity. What does that mean in the market?" Help this capitalist understand what might happen in this market given that plums will experience an increase in popularity. Please apply the perfect competition model. a. In the short-run, what will a typical plum farm experience? Why? Don't forget to use perfect competition diagram(s) when explaining it.Assume that the plum market has lots of different farms. They are producing pretty much the same product. The plum market is very much like a perfectly competitive market. When answering these questions, please use an explanation in words and the diagrams of the perfect competition model. A capitalist interested in the California plum market has asked you for an analysis. The capitalist comments, “I am guessing that plums are going to increase in popularity. What does that mean in the market?" Help this capitalist understand what might happen in this market given that plums will experience an increase in popularity. Please apply the perfect competition model. b. In the long-run, what do you think will happen in the plum market? Why? Don't forget to use perfect competition diagram(s) when explaining it.Why is perfect competition assumed to be the best market situation in most cases? Draw a graph showing the long run result of perfect competition and explain why it benefits society.
