1.(a) Explain with the help of a graph how a perfectly competitive firm determines its profit- maximizing quantity of output. (b) Explain with the help of a graph the effect of a decrease in marginal cost on the profit-maximizing quantity of output of a perfectly competitive firm.

1.(a) Explain with the help of a graph how a perfectly competitive firm determines its profit- maximizing quantity of output. (b) Explain with the help of a graph the effect of a decrease in marginal cost on the profit-maximizing quantity of output of a perfectly competitive firm.

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 1.2P

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Question

1.(a) Explain with the help of a graph how a perfectly competitive firm determines its profit-
maximizing quantity of output.

(b) Explain with the help of a graph the effect of a decrease in marginal
cost on the profit-maximizing quantity of output of a perfectly competitive firm.

Definition Definition Structure of the market that exists when many buyers and sellers exchange similar commodities and prices are fixed by market forces, demand, and supply. When there is perfect competition, a single business cannot impact the price or market value of the homogenous product.

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