Homework Answers
Q1.
there are following characteristics of perfect competition
1. they are price taker
2. there are many sellers and buyers
3. free entry and exit
4.Homogenious product
5.perfect Knowledge about market.
why do firms have no control?
in perfect competition, products are homogenous and any firm can enter easily. and everyone has perfect Knowledge about market so, it is impossible to charge price whatever the firm wants as if they will charge high price costumer have many other option.
if we talk about elasticity of demand, competitive firm has perfectly elastic demand. so, when there is perfectly elastic demand we can not charge the price beyond the market price as no one will buy at this price.
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competitive market. each identical firm has a short run total cost
curve of TC= 3Q^3 - 12Q^2 +16Q + 100, where Q is measured in
thousands of boxes per week. calculate the output for the price
below which a firm in the market will not produce any output in the
short run. ( i.e., the output for the shut down price)
a 2^1/2
b. 2
c. 1/2
d. 1/square root of 2
2)...
The figure below provides the cost curves for a firm in a
perfectly competitive market.
If the price market price is $16, what is the profit maximizing
level of output for the firm? How much profit does this firm earn
at this level of output?
Given your answer in part a, explain what will happen to this
industry in the long run.
Jim recently quit his part time job (working 15 hours per week
making $8 per hour) and opened...
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