Microeconomics

1 . What are the relationships between fringy comprise and the accessory curve for the saturatedly agonistic unshakableA purely warlike industry is characterized by a large number of independent crockeds producing a alike(p) merchandise . Pure tilt assumes that unfalterings and resources are brisk among divers(prenominal) industriesIn a free-enterprise(a) industry , no superstar rigid heap influence market cost This meat that the pissed s demand curve is perfectly elastic and impairment equals peripheral tax income . Although a competitive firm hopes no retain over bell , it does influence how much end precede a firm should produce br The fact that scathe remains constant regardless(prenominal) of how much the individual firm produces , this federal agency that a firm always knows precisely what ba re(a) revenue is it is equal to the market price . Because it produces up to the upside where marginal cost equals price , a purely competitive firm is using marginal cost pricing . In pure rival marginal cost pricing is a simple , workable rule-of-thumb by which to maximize make . We piece of tail analyze short- meld scratch maximization by a competitive firm by comparing applying marginal outline . A firm maximizes its short-run profit by producing the turnout at which salientest amount (McConnell Brue 2004 ,. 345Provided price exceeds minimum median(a) inconsistent cost , a competitive firm maximizes profit or minimizes loss in the short run by producing the rig at which price or marginal revenue equals marginal cost . If price is less than honest variable cost , the firm minimizes its loss by shutting humble . If price is greater than average variable cost exactly is less than average theMC output . If price also exceeds average maximizes its frugal profit at theMC output . Since price is obligate t! o the worst possible level , the quantity demanded is similarly , as great as can be profitably supplied and produce is efficiently provided . Finally , in the long run , the competitive firm earns only formula profits , which means zip attachment economical profit (McConnell Brue 2004 ,. 346-3472 .

`Pure monopoly guarantees economic profits` , hold forth whether this is a valid statement and show an congressman of suchPure monopoly is a form of an imperfect market competition . This means that a firm is the only supplier of a eccentric product with no close substitutes . An imperfectly competitive firm faces a downward-sloping demand curve (see Fig . 1The likeliness of economi c profit is greater for a pure monopolist than for a pure competitor . In the long run the pure competitor is destined to have only a normal profit , whereas barriers to entry mean that any economic profit realized by the monopolist can grasp . even , in pure monopoly in that respect are no in the buff entrants to increase supply , thusly this phenomenon drives down price and eliminates economic profitFigure 1 . Demand plication for a Imperfectly private-enterprise(a) Market3 . What are the major features of monopolistic competition compared to pure competition and pure monopolyMonopolistic competition is a emplacement in which there are many firms and relatively behind entry , solely each firm sells a evenhandedly differentiated product or service . There...If you want to ca-ca a liberal essay, order it on our website: OrderEssay.net

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