Economics: Private and Public Choice
16th Edition
ISBN: 9781337642224
Author: James D. Gwartney; Richard L. Stroup; Russell S. Sobel
Publisher: Cengage Learning US
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Question
Chapter 22, Problem 9CQ
To determine
The effects of competition among firms that leads to shut down condition.
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Students have asked these similar questions
Is a firm that satisfies the immediate needs and wants of target markets always doing what’s best for its consumers in the long run?
George Stigler, "Perfect Competition, Historically Contemplated," Journal of Political Economy,Vol. 55, No. 1, (February 1957), pp. 1-17.
Despite the fact that few firms sell identical products in markets where there are no barriers to entry, economists believe that the model of perfect competition is important because
A.
economists prefer studying theoretical markets instead of actual markets.
B.
all markets eventually become perfectly competitive.
C.
it is a
benchmark—a
market with the maximum possible
competition—that
economists use to evaluate actual markets that are not perfectly competitive.
D.
this is the type of market that our business laws protect and promote.
What are the options available to a firm when the market demand exceeds capacity?
Chapter 22 Solutions
Economics: Private and Public Choice
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- What is the relationship between economies of scale and the level of market competition?arrow_forwardDo you think firms really try to maximize profits? Do firms (especially small ones) know what prices they have to charge to maximize profits?arrow_forwardIn long-run equilibrium, all firms in the industry earn zero economic profit. Why is this true?arrow_forward
- Will a profit-maximizing firm in a competitive market ever produce a positive level of output in the range where the marginal cost is falling? Give an explanation.arrow_forwardAt what output rate does the firm maximize profit or minimize loss?arrow_forwardWhy would a firm that incurs losses choose to produce rather than shut down?arrow_forward
- What are the conditions that distinguish perfect competition from other market structures?arrow_forwardThe following graph shows the supply of (orange curve) and demand for (blue curve) satellite navigation devices.arrow_forwardWhat are the advantages of scale in capitalist competition?arrow_forward
- What are the advantages of pure competition?arrow_forwardIn economics terms ,what does it mean for a firm to be the right size for a market?arrow_forwardYou read in a business magazine that farmers are reaping high profits. With the theory of perfect competition in mind, what do you expect to happen over time (in the long run) to each of the following? The equilibrium output in agricultural markets based on what happens to the price given the change in supply, what do you think will happen to the equilibrium quantity? Will it remain the same, increase or decrease?arrow_forward
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