Microeconomics
Microeconomics
13th Edition
ISBN: 9781337617406
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 9.3, Problem 3ST
To determine

Effect of increase in demand on price.

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How to find the inverse demand equation faced by a perfectly competitive market?
The agricultural market whose demand and supply schedules are is initially in long-run equilibrium. Quantity then falls to 50% of its previous level as a result of an unexpectedly poor harvest. How many time periods will it take for price to return to within 1% of its long-run equilibrium level?
Firms in a perfectly competitive market are said to be “price takers”—that is, once the market determines an equilibrium price for the product, firms must accept this price. If you sell a product in a perfectly competitive market, but you are not happy with its price, would you raise the price, even by a cent?
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