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38. Easy entry and exit ensure that
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- Briefly explain the reason for the shape of a marginal revenue curve for a perfectly competitive firm.What are the four basic assumptions of perfect competition? Explain in words what they imply for a perfectly competitive firm.2. "Assuming gator farming is perfectly compettive; explain the long-run competitive equilibrium condition for the typical gator farmer and the industry as a whole."
- 1. Identify and explain the logic of the profit maximizing rule for pure competition. 2. Explain in detail the logic of why and how firms enter and exit in purely competitive industries.explain the down-sloping and upsloping long run ATC. Why may pure competition earn economic profits in the short run but not in the long run?30. Company Alpha produces its product in a perfectly competitive market that is in long-run equilibrium. What will happen if it lowers its price while increasing its output? It will increase revenue but increase costs by the same amount. It will incur economic losses. It will take business from its competitors, increasing its revenue and profit. It will begin to develop market power, making its market imperfectly competitive. Its producer surplus will increase but consumer surplus will decrease by a greater amount. 31. If barriers to entry ________ or product differentiation ________, competition in a market will ________. increase; increases; increase increase; decreases; increase decrease; increases; increase decrease; decreases; increase decrease; decreases; decrease
- What is the competitive structure of the firms listed below and why? A restaurant in a small, isolated community. It’s the only local restaurant. People drive miles away to eat here.Using examples, explain the down-sloping and upsloping long run ATC. Why may pure competition earn economic profits in the short run but not in the long run?How does a perfectly competitive market adjust during exit and how does this reduce economic loss of existing firms? Show diagram.
- 30.What is true of a firm's production if it operates in a perfectly competitive market in long-run equilibrium? Marginal revenue = demand = marginal cost > average total cost Marginal revenue = marginal cost = average fixed cost Average total cost = price = average variable cost Marginal cost < Marginal revenue Price = marginal cost = average total costConsider the following short-run data for a perfect competitor. Use the data to answer the following questions. Justify your answers and calculations. Quantity Demanded Price TC TVC MC 0 22 150 - 1 20 2 15 3 22 4 34 5 54 6 78 d) What is the profit maximizing level of output for this producer? e) Calculate profits or losses at all levels of output.15 Explain why perfect competition is not compatible with firms having increasing returns to scale production (IRS) technologies (Hint: draw the demand curve, declining AC and constant MC and analyze profit maximization of perfectly competitive firm)
