4. Perfect competition is a hypothetical market form associated with neo- classical economic theory. A number of assumptions are made which provide the key components of the definition, including: the existence of perfect knowledge, no barriers to entry and homogeneous output. Critically analyze the perfect competition and pure competition from the viewpoint of (10 economics.

4. Perfect competition is a hypothetical market form associated with neo- classical economic theory. A number of assumptions are made which provide the key components of the definition, including: the existence of perfect knowledge, no barriers to entry and homogeneous output. Critically analyze the perfect competition and pure competition from the viewpoint of (10 economics.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Identification. Answer the following questions below. QUESTIONS: 1.) If firms are rational, why is it they could underproduce or overproduce?2.) What is the demand for products or factors that are not directly consumed but go into the production of a final product?3.) In short run production function, when a total product reaches its maximum, marginal product becomes what?4.) When does the total diminishing returns take effect?5.) In short run production function, a change in output necessitates thewhat?
Respond to the question with a concise and accurate answer, along with a clear explanation and step-by-step solution, or risk receiving a downvote. 1 Assume a firm faces these costs: total cost of capital = $4,000; price paid for labor = $20 per labor unit; and price paid for raw materials = $8 per raw-material unit. Originally the firm produced 2,000 units of output by combining its fixed capital with 200 units of labor and 500 units of raw materials. Now the firm improves its production process so that it can produce 3,000 units of output by combining its fixed capital with 100 units of labor and 500 units of raw materials. What happened to total cost? Multiple Choice TC increased by $2,000 TC decreased by $2,000 TC decreased by $4,000 TC remained unchanged 2 Assume a firm faces these costs: total cost of capital = $4,000; price paid for labor = $20 per labor unit; and price paid for raw materials = $8 per raw-material unit. Originally the firm produced 2,000 units of output by…
10. Characteristics of competitive markets The model of competitive markets relies on these three core assumptions: 1. There must be many buyers and sellers-a few players can't dominate the market. 2. Firms must produce an identical product-buyers must regard all sellers' products as equivalent. 3. Firms and resources must be fully mobile, allowing free entry into and exit from the industry. The first two conditions imply that all consumers and firms are price takers. While the third is not necessary for price-taking behavior, assume for this problem that a market cannot maintain competition in the long run without free entry. Identify whether or not each of the following scenarios describes a competitive market, along with the correct explanation of why or why not. Scenario Competitive? Dozens of companies produce plain white socks. Consumers regard plain white socks as identical and don't care who manufactures their socks. Yes, meets all assumptions No, no free entry In a small town,…
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The main distinction between applied and basic business research is that: a. basic research does not have to be carried out in a scientific manner b. basic research undertaken to make a contribution to existing knowledge, whereas applied research is undertaken specifically to solve a current problem c. applied research is aimed at solving a currently problem, whereas knowledge gained by the findings of basic research cannot be applied by organizations to solve their own problems d. none of the above
1. Characteristics of competitive markets The competitive market model depends on the following three core assumptions: 1. There must be many buyers and sellers-a few players can't dominate the market. 2. Firms must produce an identical product-buyers must regard all sellers' products as equivalent. 3. Firms and resources must be fully mobile, allowing free entry into and exit from the industry. The first two conditions imply that all consumers and firms are price takers. While the third is not necessary for price-taking behavior, assume for this problem that a market cannot maintain competition in the long run without free entry. Identify whether or not each of the following scenarios describes a competitive market, along with the correct explanation of why or why not. Scenario The government grants a patent to a pharmaceutical company protecting an experimental cancer treatment. That company is the only pharmaceutical producer allowed to manufacture and sell the treatment. In a large…
Q.4 1.) State whether it is True/False and provide an explanation for each. An example or counterexample could be provided too. A.)If the production technology is neither increasing returns to scale nor decreasing returns to scale, then it must be constant returns to scale. B.) In the real-world, marginal cost curve is usually U-shaped. Therefore, in a perfectly competitive market, a firm can maximize profit at two different output levels in the short-run.
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RUE OR FALSE 1. Cost allocation could be a variable input to encourage design of products that are simpler to manufacture and less costly to service.2. In long-run pricing, decisions should consider all manufacturing and non-manufacturing costs but should consider all future direct and indirect costs as irrelevant. 3. Reverse engineering can be used to analyze competitors' products to determine product designs and materials and to understand the technologies competitors use. 4. Fluctuations in exchange rates between different countries' currencies affect costs and pricing decisions of a company 5. Selling prices computed under cost-plus pricing are prospective prices that may or may not actually be charged to customers. 6. There are alternatives ways of measuring the cost base when applying a cost-plus method to pricing but research shows that many managers prefer to use full cost as the cost base. 7. Monopolists can charge prices without limitations as there is no…