a) Describe the factors that drive profits to zero in perfectly competitive markets in the long run. Explain carefully the incentives that drive the market to a long run equilibrium. b) Why would a firm choose to operate at a loss in the short run? Explain carefully. c) When do firms decide to shut down production in the short run? Explain carefully.
a) Describe the factors that drive profits to zero in perfectly competitive markets in the long run. Explain carefully the incentives that drive the market to a long run equilibrium. b) Why would a firm choose to operate at a loss in the short run? Explain carefully. c) When do firms decide to shut down production in the short run? Explain carefully.
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter8: Perfect Competition
Section: Chapter Questions
Problem 1SCQ: Firms ill a perfectly competitive market are said to be price takers that is, once the market...
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![a) Describe the factors that drive profits to zero in perfectly competitive markets in the long run. Explain
carefully the incentives that drive the market to a long run equilibrium.
b) Why would a firm choose to operate at a loss in the short run? Explain carefully.
c) When do firms decide to shut down production in the short run? Explain carefully.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F77ff0dc1-7282-4fa0-94cd-a91857c24dd6%2Fbe4dbbb0-2601-478c-8745-69e25ea7425b%2F7gzjfav_processed.jpeg&w=3840&q=75)
Transcribed Image Text:a) Describe the factors that drive profits to zero in perfectly competitive markets in the long run. Explain
carefully the incentives that drive the market to a long run equilibrium.
b) Why would a firm choose to operate at a loss in the short run? Explain carefully.
c) When do firms decide to shut down production in the short run? Explain carefully.
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