PLEASE ANSWER QUESTION 7 Section one-theoryA: Key concepts1. What is a Pareto improvement? Give a short example.2. What is a perfectly competitive market? (in terms of firm behaviour)B: Theory: Market powerTerminology: diminishing returns to scale (DRS), constant returns (CRS), increasing returns (IRS)3. A firm with positive fixed costs encounters CRS and then DRS as it expands production. Showthe firm's marginal costs, average variable costs, and average costs in a suitably labelledgraph. (careful...)4. We are in a perfectly competitive market, in which all firms are identical. Market demand isdownward sloping.a. Draw the market supply, demand, and equilibrium.b. At present, our firm is producing new widgets for £1.15 and the market price is £2. Isthe firm maximising profits? Is the firm in profit or loss?5. Our firm is now a monopolist facing the same downward-sloping demand curve. Whathappens to price and quantity produced? Explain.Section two-theory and policyC: Disruptive technologyEstate agents help sellers advertise their home for sale to potential buyers. At present, estate agentsoperate in a perfectly competitive market, at LR equilibrium.6. A large number of new estate agents (with the same technology as existing firms) enter themarket. What is the effect on output, price, and profits in the short-run? How about thelong-run?7. A well-known internet company (WKIC) quietly launches an internet service in which peoplecan find houses. The WKIC has considerably lower average costs than traditional estateagents. What is the effect on output, price, and profits in the short-run? How about thelong-run? (Assume that the offering of the WKIC can be duplicated.)

perfectly competitive market where firm sells identical products and firms are price taker.

7. A well-known internet company (WKIC) quietly launches an internet service in which people can find houses. The WKIC has considerably lower average costs than traditional estate agents. What is the effect on output, price, and profits in the short-run? How about the long-run? (Assume that the offering of the WKIC can be duplicated.)

7. A well-known internet company (WKIC) quietly launches an internet service in which people can find houses. The WKIC has considerably lower average costs than traditional estate agents. What is the effect on output, price, and profits in the short-run? How about the long-run? (Assume that the offering of the WKIC can be duplicated.)

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 9SCQ: Productive efficiency and allocative efficiency are two concepts achieved in the long mm in a...

See similar textbooks

Similar questions

Productive efficiency and allocative efficiency are two concepts achieved in the long mm in a perfectly competitive market. These are the two reasons why we call them perfect. How would you use these two concepts to analyze other market structures and label them imperfect?
4. Examine the behavior of perfect competitive markets. How are prices determined in competitive markets? How does competition affect the profits of a firm or industry? What does society gain from market competition?
Only typed answer Briefly describe some of the key characteristics of a perfectly competitive market. Explain the impact of the number of firms and the type of product that is produced. Describe what happens in a competitive market when firms in the market are earning profits.
3 examples of perfectly competitive markets and dose these firms profit in long run or short run
Multiple choice question - Micro 33) In a competitive market that is characterized by free entry and exit, what will be the result? A. All firms will operate at efficient scale in the short run. B. The price of the product will differ across firms. C. All firms will operate at efficient scale in the long run. D. The number of sellers in the market will steadily decrease over time 32) When profit-maximizing firms in a competitive market are earning profits, what must be happening in the market? A. The most inefficient firms will be encouraged to leave the market. B. New firms will enter the market. C. Market supply must exceed market demand at the market equilibrium price. D. Market demand must exceed market supply at the market equilibrium price
3. The following questions discuss the relationship between firm decisions, market supply, and market equilibrium in a perfectly competitive market. a. Complete the following table for a company in the short term:
Question 3 The market for fertilizer is perfectly competitive. Firms in the market are producing output but are currently incurring economic losses. a. How does the price of fertilizer compare to the average total cost, the average variable cost, and the marginal cost of producing fertilizer? b. Draw two graphs, side by side, illustrating the present situation for the typical firm and for the market. [Upload a picture] c. Assuming there is no change in either demand or the firms’ cost curves, explain what will happen in the long run to the price of fertilizer, marginal cost, average total cost, the quantity supplied by each firm, and the total quantity supplied to the market.
Explanation with an example1-Perfectly competitive market2-Competitive market
2. List the features that characterize a perfect competitive market. 3. What is a perfectly competitive market? Perfectly competitive markets establish capitalist justice and maximize utility in a way that respects buyers’ and sellers’ negative rights? Explain how and what types of negative rights are respected.
1. Identify a market that resembles some of the key characteristics of a perfectly competitive market and discuss each of these characteristics of the market in detail 2. Has any particular firm in this market found a way to differentiate or distinguish itself from its competitors? If so, what did the firm do? If not, what prevents the firm from differentiating itself?
1.) Which one of the following sets of circumstances could the existence of economies of scale cause in a market? a.) More firms looking to move overseas. b.) Firms merging with and buying out other firms in their markets, thus leading to an increase in market competition c.) More american overseas firms will decide to come home. d.) None of the three other possible answers listed here are correct.
Question:Imagine that you set up your own business. Assume that your firm produces a single product. Please discuss in detail whether the market for your product satisfies the basic assumptions of perfectly competitive markets one by one.