5. Which of the following is not necessarily a characteristic of perfect competition?a. extensive advertisingb. a large number of buyers and sellersc. an identical product across firms in the industryd. freedom of entry and exit in the long run

The market is a location where the transaction of services and commodities takes place. It is…

Answered: 5. Which of the following is not…

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 12RQ: What are the four basic assumptions of perfect competition? Explain in words what they imply for a...

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1.Define the perfect competition market structure. 2.what are the characteristics of that market? 3.How many firms are in that market.(a few, one, many etc)
1. A) What are the underlying assumptions associated with Perfect Competition? B) Explain why firms operating under Perfect Competition make normal economic profit in the long-run. C) Explain why Perfect Competition results in Allocative Efficiency. D)Explain why Perfect Competition results in Economic Efficiency.
2. Now draw a firm operating under perfect competition that is losing money but should still stay open in the short run. (Again, show both the firm and the industry graphs)a. What happens over-time, if many firms are suffering economic losses?b. Is this good or bad for consumers? Explain.
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5. Which of the following is not necessarily a characteristic of perfect competition? a. extensive advertising b. a large number of buyers and sellers c. an identical product across firms in the industry d. freedom of entry and exit in the long run