The four statements below each describe a different market, highlighting one feature of that market. Read the statements and select those markets which, based on the feature described, must be imperfectly competitive. Select one or more answers: Select one or more: O Firms can sell as much output as they wish at the market price O Firms can innovate new production processes O Firms can make supernormal profit in the long run Firms can increase profits by cutting their price

The four statements below each describe a different market, highlighting one feature of that market. Read the statements and select those markets which, based on the feature described, must be imperfectly competitive. Select one or more answers: Select one or more: O Firms can sell as much output as they wish at the market price O Firms can innovate new production processes O Firms can make supernormal profit in the long run Firms can increase profits by cutting their price

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question 1 Which of the following is not a characteristic of a perfectly competitive market? Group of answer choices Firms are able to sell all of the output that they choose to produce at the market price. Individual firms are price setters. There is free entry and exit. Firms produce identical goods.
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Will, Jill, and Phil are all wheat farmers. The wheat industry is perfectly (purely) competitive. The first chart shows how much each farmer produces at different price levels. The second chart shows each farmer's minimum average total cost (ATC), average variable cost (AVC), and marginal cost (MC). Based on this data (assuming these three are the only producers), answer the questions that follow. Short-run quantity supplied Price Will Jill Phil $2.00 4 2 0 $4.00 6 4 2 $6.00 9 5 4 $8.00 12 8 6 Firm a. What is the cause of the divergence in the short-run Minimum ATC and long-run supply curves? Minimum AVC Minimum MC $1.00 $2.00 Will Jill Phil $2.50 $5.00 $7.00 $2.50 $0.50 $1.00 $2.00 government regulation changes in the market differing individual cost structures b. Suppose that the market price dips to $2.25 in the short run before ultimately settling at $2.50 per bushel. Who exits immediately, and who exits in the long-run when costs are no longer fixed? Phil exits immediately, Jill…