Under the assumption of perfect competition in short run firms only earn abnormal profit. True/False. Explain your answer theoretically and graphically?

Q: Explain how economies of scale keep new firms from entering an industry in which firms are earning…

A: Economies of scale refer to that part of long-run average cost whereby producing more and more units…

Q: normal profit

A: There are different market structures like: ‘Perfect Competition’, ‘Monopoly’, ‘Monopolistic…

Q: Under the assumption of perfect competition in short run firms onlye earnabnormal profit.…

A: In perfect competition on short run, firms can earn : Abnormal profits Normal profits Losses So the…

Q: Underer the assumption of perfect competition in short run firms only earn abnormal profit.…

A: The perfect competition is the market structure with large number of buyers and sellers, selling…

Q: Q4. For a firm in Perfect competition, the profit maximization output rule is either MR-MC

A: A profit-maximizing firm produces at the intersection point of MR and MC. i.e., MR = MC is the…

Q: What are the assumptions of perfect competition?  What are the prospects for profitability in the…

A: The perfect competition is a theoretical market structure, which follows some assumptions. In this…

Q: was the west fraser timber company always been classified as perfectly competitive market in the…

A: When talking about the competitiveness of a firm, it can be said that it is determined by the market…

Q: Explain why it is not economical for a firm to operate under increasing returns and negative…

A: Solution: Increasing return: It is the first phase of production. In this phase every additional…

Q: Under perfect competition, firms profit in the long run will be:- (1) normal profit (2) abnormal…

A: # Perfect competition is a market structure where large number of buyers and sellers are there.  The…

Q: Assume a purely competitive increasing-cost industry is initially in long-run equilibrium but then…

A: Demand is the sum of the total quantity of commodities for which the customers are willing to pay…

Q: Would independent trucking fit the characteristics of a perfectly competitive industry? and why?

A: A perfectly competitive market is where there are many numbers of buyers and sellers, with…

Q: Which of the following is not necessarily a characteristic of perfect competition? low pricesa large…

A: The implications of perfect competition are as follows: (i) The price is determined by the forces of…

Q: A large city has nearly 500 restaurants, with new ones entering regularly as the population grows.…

A: A perfectly competitive market alludes to a market structure in which there are countless firms and…

Q: When discussing pure competition, the term long run refers to a period of time long enough to allow:…

A: Option ‘c’ is the correct answer. Option ‘c’ - Because Option ‘a’ and ‘b’ both are correct. Hence,…

Q: Why would a profit-maximizing, perfectly competitive form continues to operate for a period of time…

A: A perfect competitive firm who is facing losses in the market will decide to shut down if the price…

Q: In perfect competition, in the long run, P=minimum ATC. True False

A: The long-run equilibrium point for a wonderfully competitive market occurs where the demand curve…

Q: The key characteristic which prevents firms in a perfectly competitive industry from earning…

A: In perfect competition there are large number of buyers and sellers selling homogeneous goods which…

Q: Under the assumption of perfect competition in short run firms only earn abnormal profit.…

A: The statement is false.

Q: If the firms in a competitive industry incur an economic loss, what happens to supply, price,…

A: If firms earn economic loss, some of them will exit the market. This will decrease market supply,…

Q: In a perfectly competitive market, many firms sell an identical product. True False

A: Four different types of market structures in an economy are perfect competition, monopoly, oligopoly…

Q: If all assumptions of perfect competition hold, why would firms in such an industry have little…

A: Meaning of Perfect Competition: The term perfect competition refers to the market under which…

Q: Under what conditions will a firm shut down temporarily? Explain theoretically and graphically.

A: Firm would shut down temporarily,if it is not able to cover the fixed cost. For this,price has to be…

Q: In the short-run model of perfect competition, there is always a range of prices above the shutdown…

A: When talking about a perfectly competitive firm it can be seen that the firm will stay in the market…

Q: Firms always lose money in a long-run industry equilibrium, true or false?

A: Firms always lose money in a long-run industry equilibrium, true or false.

Q: An industry with many stores offer laminating as a service to their customers. Suppose that each…

A: An industry is in the long run when the Long Run Average Cost is equal to the Long Run Marginal Cost…

Q: Give examples, when the conditions of pure and perfect competition are relatively accomplished.

A: Example when conditions of pure and perfect competition would be accomplished is agricultural…

Q: Classify the assumptions according to whether or not each item is an assumption made under perfect…

A: Market structure refers to the place where the transaction of goods and services takes place between…

Q: Draw the following cases for perfect competition. Also perform box analysis for profit/loss. P>ATC…

A: A perfectly competitive market is one where there are large number of buyers and sellers. The good…

Q: Is the Stackelberg leader guaranteed to make a higher profit than it would under standard Cournot…

A: None of the players in the Cournot Model understand interdependence. Therefore, continuing to…

Q: In a perfectly competitive market, please compare the short run and long run prices in an increasing…

A: Perfect competition refers to the market structure where there are a large of number of buyers and…

Q: Q1 - In perfect Competition short run abnormal profits are: competed away by: A- Firms exciting the…

A: A perfect competition is a structure of a market in which there are many sellers and buyers.  The…

Q: The salmon fishery on Vancouver Island has historically been one of the world’s richest. Over the…

A: Business strategy: A procedure is a drawn-out arrangement that you make for your organization to…

Q: Distinguish among three types of imperfectly competitive industries and describe how imperfect…

A: The three types of imperfectly competitive industries are: Monopoly, Oligopoly and Monopolistically…

Q: Mehmood’s lawn-mowing service is a profit-maximizing, competitive firm. Mehmood mows lawns for…

A: 1. In short run TR > VC  Or - continue TR = P×Q   2.in long run TR < TC Or - exit P < AVC…

Q: Define a perfect competition market structure?

A: Market structure defines the features of a market in which the buyers and sellers interact to sell…

Q: In perfect competition, the maximum benefit is achieved where the vertical difference between total…

A: Perfect competition is characterized by free entry and exists, no barriers, no transaction costs,…

Q: Discuss with the help of graphical presentation and empirical example the situation that would cause…

A: Perfectly competitive market is the market where large numbers of sellers and buyers are exchanging…

Q: Describe how profits and losses drive the long-run adjustment process of pure competition.

A: Pure competition is a market structure where there are large number of sellers dealing in a…

Q: Suppose you start a business of manufacturing computer software. Assume that this computer software…

A: Given the fixed cost per month = 80,000 Total cost = 140000 Quantity of software = 1000 Average…

Q: Decide whether a firm making short-run losses should continue to operate or shut down its…

A: In the short-run, a profit-maximizing firm will continue producing a positive amount of output even…