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![In a perfectly competitive industry we expect long-run equilibrium price to equal
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and long-run economic profits to [Select]
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- In a perfectly competitive industry, what mechanism that adjusts price to minimum long-run average total cost?In Perfect Competition, Demand shifts produce greater price adjustments andsmaller quantity adjustments in the long run than they do in the short run – Justifyyour agreement / disagreement to the statement.b). The Philadelphia water ice industry is a constant cost industry. The demand for water ice shifts outward each year when it gets hot. What are the steps by which the competitive water ice market insures an increased amount of water ice. Explain and graph at the industry and firm levels. What is the long-run price of water ice?
- Answer the following, providing a graphical illustration along with your answer where necessary:a) What is the profit maximising condition in a market with perfect competition?b) Explain what is meant by abnormal profit? What is the adjustment process from short-runabnormal profit to long-run equilibrium in a perfectly competitive market?c) Please find below Pricing options for firm A and B, along with individual payoffs (Firm A’spayoff/Firm B’s payoff)Firm BFirm APrice £2 Price £1Price £2 £20,000/£20,000 £10,000/£24,000Price £1 £24,000/£10,000 £12,000/£12,000Assume you are the pricing manager at Firm A;i) What is your payoff for a ‘maximin’ strategy?ii) What is your payoff for a ‘maximax’ strategy?iii) Does a dominant strategy exist within this prisoners’ dilemma?Answer the following, providing a graphical illustration along with your answer where necessary:a) What is the profit maximising condition in a market with perfect competition?b) Explain what is meant by abnormal profit? What is the adjustment process from short-runabnormal profit to long-run equilibrium in a perfectly competitive market?c) Please find below Pricing options for firm A and B, along with individual payoffs (Firm A’spayoff/Firm B’s payoff)Firm BFirm APrice £2 Price £1Price £2 £20,000/£20,000 £10,000/£24,000Price £1 £24,000/£10,000 £12,000/£12,000Assume you are the pricing manager at Firm A;i) What is your payoff for a ‘maximin’ strategy?ii) What is your payoff for a ‘maximax’ strategy?iii) Does a dominant strategy exist within this prisoners’ dilemma? QUESTION A AND B ALREADY SOLVED, FROM C ONLY !!!List the characteristics needed for a perfectly competitive market. Provide a simple explanation of each - your explanation should explain how does that characteristic enable a perfectly competitive firm to form/exisit.
- Consider the perfectly competitive market for pineapples, which is in long-run equilibrium. Now income increases (we may assume that pineapples are a normal good). As a result, we would expect that The short-run profits stay the same The long-run profit for each firm increases. The short-run quantity for each firm increases The long-run quantity produced by each firm increasesWhat are the Characteristics of a Purely Competitive Market?Consider the figure below. If the industry is perfectly competitive and the market price is $15, what do we expect to happen in the long run? MC ATC y P $15 ******** D₁ Q Supply will shift from $1 to $2 Supply will shift from $2 to S1 O Demand will shift from D1 to D2 Demand will shift from D2 to D1 O MR-P
- Consider the market for solar power. Assume the market is perfectly competitive and initially in long-run equilibrium; solar power sells for $.25 per kwh (kilowatt hour, a unit of power). Next, to encourage conservation, Congress taxes all forms of energy EXCEPT solar power, causing an increase in the demand for solar Show what happens to the market and the firm in the short run; indicate clearly what happens to price, quantity, and profit.Starting from long-run equilibrium in a perfectly competitive increasing-cost industry, show on a diagram the effect of price and quantity of an increase in demand in the market period, in the short run, and in the long run.In a perfectly competitive market all producers sell
