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April 30, 2024

History Question

Question 1: Saros describes the assumptions in the perfect competition model. What are they? It’s important to understand that no real life market meets these assumptions perfectly. The model is just that — a model. Question 2: If we assume a firm is operating in a perfectly competitive market structure, the firm cannot change prices. It must charge what everyone else is charging. If we try to graph the revenues of a perfectly competitive firm, what woudl that graph look like? Question 3: If we assume a firm has a rising marginal cost, what would that graph look like? Question 4: Explain how marginal adjustments can be used to determine the profit maximizing level of output. Question 5: What will happen if the market price is greater than a typical firm’s average cost? this is case #1 in chapter reading.

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