5. Summarize the characteristics of a perfectly competitive market. 6. What assumptions in the perfect competition model ensure that economic profit is zero in the long run? Explain how these assumption satisfy the conditions for zero économic profits. 7. Explain why a firm maximizes its profits by producing the level of output at which marginal revenue equals marginal costs. 8. Explain why a firm should continue to operate in the short run so long as market price is greater the firm's average variable cost at the profit-maximizing level of output. 9. Describe the basic characteristics of the monopoly model and explain how these characteristics affect the ability of a monopolist to earn positive economic profits, both in the short run and over time. 10. Explain how network externalities act as a barrier to entry in a monopoly market structure.

5. Summarize the characteristics of a perfectly competitive market. 6. What assumptions in the perfect competition model ensure that economic profit is zero in the long run? Explain how these assumption satisfy the conditions for zero économic profits. 7. Explain why a firm maximizes its profits by producing the level of output at which marginal revenue equals marginal costs. 8. Explain why a firm should continue to operate in the short run so long as market price is greater the firm's average variable cost at the profit-maximizing level of output. 9. Describe the basic characteristics of the monopoly model and explain how these characteristics affect the ability of a monopolist to earn positive economic profits, both in the short run and over time. 10. Explain how network externalities act as a barrier to entry in a monopoly market structure.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Firms In Competitive Markets

Section: Chapter Questions

Problem 8PA

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2
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