Answered: What is the equilibrium or…

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

What is the equilibrium or profit-maximizing quantity of production for a perfectly competitive firm?

Expert Solution

Step 1

Prefect competitive market is:-

1) in perfect competitive market, there are many number of sellers and buyers which turns the market into most efficient market.

2) in this, consumers have full knowledge of the product which again makes it effiecient.

3) no price discrimination is done in this market.

.4) there are no barriers to entry and exit by the firms in this market as if firms are earning losses then it may exit the firm easily and if firms are earning super profits then more firms can enter into the industry also.

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