Consider a perfectly competitive market where variable input markets are also perfectly competitive but not all firms have the same fixed cost. a. Draw the two-panel competitive model and derive and explain, via a change in demand, the market long run supply curve. b. Explain the difference between profit and producer surplus, in general. Discuss long run profitability for firms and producer surplus (where it comes from and who gets it) in the situation graphed in part a.

Consider a perfectly competitive market where variable input markets are also perfectly competitive but not all firms have the same fixed cost. a. Draw the two-panel competitive model and derive and explain, via a change in demand, the market long run supply curve. b. Explain the difference between profit and producer surplus, in general. Discuss long run profitability for firms and producer surplus (where it comes from and who gets it) in the situation graphed in part a.

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter8: Perefect Competition

Section: Chapter Questions

Problem 5SQP

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