Exploring Microeconomics (MindTap Course List)
7th Edition
ISBN: 9781285859453
Author: Robert L. Sexton
Publisher: Cengage Learning
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Question
Chapter 12, Problem 1P
To determine
To find:
The most perfect competitive industry in the given list of industries.
Expert Solution & Answer
Answer to Problem 1P
Option b. Fast food industry, and Option e. Clothing industry are most likely to be
Explanation of Solution
Fast food industry and clothing industry are most likely to be perfectly competitive because a perfectly competitive market is an organized market with the liberty of free entry and exits of firms, and both the sellers and buyers have perfect knowledge about the market and prevailing prices. However, the price of goods and services in the fast food industry and clothing industry is determined by the market forces,
The Chicago board of trade and NY stock exchange belong to
Economics Concept Introduction
Perfect competition:
Perfect competition is that market structure in which large number of buyers and sellers of a commodity exist, and firms sell a homogeneous product. Under this market, firms are the price taker and buyers and sellers contain perfect knowledge about the prevailing market condition.
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Which of the following factors tend to decrease the wage differential between union and non union workers:
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all of the above
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The accompanying graph shows the short-run demand and cost situation for a price searcher in a market with low barriers to entry.
Price (dollars)
24
8
MC
ATC
MR
30
D
45 50
Quantity/time
The firm will maximize its profit at a quantity of
units.
After choosing the profit maximizing quantity, the firm will charge a price of
The firm will receive $
in revenue at the profit-maximizing quantity.
The total cost of production for this profit-maximizing quantity is S
The maximum profit the firm can earn in this situation is $
per unit for this output.
How will the situation change over time?
Profits will attract rival firms into the market until the profit-maximizing price falls to the level of per-unit cost.
◇ Losses will induce firms to leave this market until the profit maximizing price falls to zero.
The market will adjust until the price charged by this firm no longer exceeds marginal cost at the profit-maximizing quantity.
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Chapter 12 Solutions
Exploring Microeconomics (MindTap Course List)
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