EBK ECONOMICS: PRINCIPLES AND POLICY
13th Edition
ISBN: 9781305465626
Author: Blinder
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Question
Chapter 10, Problem 5TY
To determine
The effect of the existence of an economic profit in a
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EBK ECONOMICS: PRINCIPLES AND POLICY
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- Can you think of a product that meets at least most of the criteria required for a perfectly competitive market? Which criteria does it fail to meet?arrow_forwardHow equilibrium price is determined under perfect competition?arrow_forwardIn the long run, perfectly competitive firms make zero economic profit. If this is the case, why does the firm even bother producing? Why not exit the market completely?arrow_forward
- Why don't firms in a competitive market have excess capacity in the long run?arrow_forwardWill a profit-maximizing firm in a competitive market ever produce a positive level of output in the range where the marginal cost is falling? Give an explanation.arrow_forwardIdentify the defining characteristics of a competitive market.arrow_forward
- Why are perfectly competitive markets considered economically efficient?arrow_forwardYou read in a business magazine that farmers are reaping high profits. With the theory of perfect competition in mind, what do you expect to happen over time (in the long run) to each of the following? The number of farms can new firms enter the market? If they can, what will happen to the market supply curve? If they cannot enter, explain.arrow_forwardWhat happens when a perfectly competitive market is in equilibrium?arrow_forward
- When should a firm exit the market in the long run?arrow_forwardIf new technology in a perfectly competitive market brings about a substantial reduction in costs of production,how will this affect the market?arrow_forward“In a perfectly competitive market, firms always operate at the lowest per-unit cost." Is the preceding statement true or false? Explain your answer.arrow_forward
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