### Understanding Perfect Competition and Cost Curves#### Question 1In a perfectly competitive market, a firm has no control over the price because:- **a.** the government imposes price ceilings on the products produced in perfectly competitive industries.- **b.** the market demand for products produced in perfectly competitive industries is perfectly elastic.- **c.** every firm's product is a perfect substitute for every other firm's product.- **d.** there is free entry and exit from the industry.#### Question 2A firm is experiencing ______ on the upward-sloping portion of a firm’s long-run average cost curve.- **a.** increasing returns to scale- **b.** decreasing returns to scale- **c.** constant returns to scale- **d.** diminishing marginal returnsThese questions explore the fundamentals of market structures, specifically focusing on the principles of perfect competition and cost behaviors in the long run. Understanding these concepts is essential for analyzing how firms operate and compete within different market environments.

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A firm in a perfectly competitive market has no control over price because O a. the government imposes price ceilings on the products produced in perfectly competitive industries. O b. the market demand for products produced in perfectly competitive industries is perfectly elastic. O c. every firm's product is a perfect substitute for every other firm's product. O d. there is free entry and exit from the industry. A firm is experiencing the upward-sloping portion of a firm's long run average cost curve. O a. increasing returns to scale O b. decreasing returns to scale Ос. constant returns to scale O d. diminishing marginal returns

A firm in a perfectly competitive market has no control over price because O a. the government imposes price ceilings on the products produced in perfectly competitive industries. O b. the market demand for products produced in perfectly competitive industries is perfectly elastic. O c. every firm's product is a perfect substitute for every other firm's product. O d. there is free entry and exit from the industry. A firm is experiencing the upward-sloping portion of a firm's long run average cost curve. O a. increasing returns to scale O b. decreasing returns to scale Ос. constant returns to scale O d. diminishing marginal returns

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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