In a perfectly competitive industry (1) There are significant barriers to entry; (2) Each firm can significantly influence the price of the good; (3) There are not many buyers of the industry’s product; (4) All firms in the market sell their product at the same price.
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In a
(1) There are significant barriers to entry;
(2) Each firm can significantly influence the
(3) There are not many buyers of the industry’s product;
(4) All firms in the market sell their product at the same price.
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- Which of the following is a reason why firms in a perfectly competitive market have no influence over price? Barriers exist to enter the market. All firms in the market sell identical products. There are many sellers that produce similar, but not identical, products. Buyers and sellers lack perfect information about the product and pricing.In the short run, perfectly (or purely) competitive firms will maximize their profit by producing (select all options that apply): a. a quantity where marginal revenue > marginal cost. b. the quantity where marginal revenue = marginal cost. c. the largest quantity possible, not considering costs or revenues. d. a small quantity to drive up the price. e. the quantity where price equals marginal cost. f. none of the above are correct.Show a firm that is earning zero economic profits, but has some market power. Then, assume this market power is entirely eliminated when a new competitor enters the market with the same technology and produces a perfect substitute. Showing in your diagram how the firm must adjust its production level to most effectively compete with the new entering firm, explain why maintaining competition is important.
- Why do sellers in perfectly competitive industries have no market power? a. There are large number of buyers and sellers. b. They all sell the same/identical goods. c. There are perfect substitutes available for the goods sold by any particular seller because they all sell identical goods. d. All of the above. e. None of the above.A firm operates in a perfectly competitive market. Its marginal cost = to its marginal revenue. It is incurring economic losses . Based on this information, which of the following is true? a) An increase in output will decrease the forms economic losses. b) a decrease in output will decrease the firms economic losses. c) Any change in output will fail to result in positive economic profits. d) An increase in price will decrease the firms economic losses. e) the forms marginal revenue exceeds its outputs average total costAssume that the market determined price is $10 in a perfectly competitive industry. A firm is currently producing 100 units of output. Average total cost is $8 while marginal cost is $8 and average variable cost is $6. Is the firm producing the profit-maximizing level of output? Why or why not? If not, what should the firm do?
- One way to increase profits in your business is to find a way to reduce your costs. Use the average cost and marginal cost curves presented in class to represent a firm that finds a way to reduce its costs. Assume the firm operates in a perfectly competitive industry, where the typical firm has no market power and free entry and exit eliminate economic profits. Use your diagram to show the economic profit the firm earns after it reduces its costs, but also use your diagram to show how the firm will adjust its price and quantity as other firms enter the industry. Complete your analysis by explaining why the price a firm receives for its product will tend to bear a relationship to its cost structure, even if competition is not perfect.Why do sellers in perfectly competitive industries have no market power? choose from answers below a. There are large number of buyers and sellers. b. They all sell the same/identical goods. c. There are perfect substitutes available for the goods sold by any particular seller because they all sell identical goods. d. All of the above. e. None of the above.Which of the below is FALSE under perfect competition in the long-run? A. there is no producer surplus. B. the industry supply curve is flat at the minimum long-run average cost. C. mergers occur until only few firms dominate the market. D. competition leaves suppliers with a normal profit but no more. E. consumers get all of the surplus in the market.
- The wireless data industry, in which firms compete vigorously against one another for customers, is not considered a perfectly competitive industry. You can choose multiple answers Which of the following industry characteristics make the wireless data industry a non-perfectly competitive industry? A.For wireless firms, long-run economic profits are possible. B.Substantial barriers to entry prevent new firms from entering the wireless market. C.The market is dominated by a few very large wireless firms. D.Wireless firms provide a homogeneous product.Limiting Market Power: Regulation and Anti-Trust Predatory pricing threatens to keep competitors out of the market. It is a price that is so low that it will be profitable for the firm that adopts it only if a rival is driven out of the market. Debate why predatory pricing is an economic inefficiency in a perfectly competitive.In perfect competition, the price of the product is determined where the industry Select one: a. supply curve and industry demand curve intersect. b. elasticity of supply equals the industry elasticity of demand. c. average variable cost equals the industry average total cost. d. fixed cost is zero.
