What does it mean to say that: “A firm operating under perfect competition conditions is a price taker"? Why Can't this firm set any price it chooses? What if it operates in a monopolistically competitive market, would it be able to set the price? Why? Give some real life examples to support your answer.
What does it mean to say that: “A firm operating under
taker"?
Why Can't this firm set any price it chooses? What if it operates in a
competitive
support your answer.
2. You overheard Mr. John, the newly-hired marketing manager, saying: “I think our company should
take advantage of economies of scale by increasing output, thereby spreading out our overhead
fixed costs”.
Would you agree with this statement? If not, provide a better description for the term
“economies of scale”. Explain how they may be achieved by organizations. Highlight what would
prevent them to occur.
3. For many, the principle “marginal revenue equal marginal cost" condition for profit maximization
is rather confusing.
Discuss the rationale behind the condition, highlighting how different it is from the break-even
analysis
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