If a perfectly competitive firm manufacturing chairs decides to ...

[Mr3Hunna]

If a perfectly competitive firm manufacturing chairs decides to produce 100 more chairs, what happens to the market price of a chair?
 
  What will be an ideal response?

Question 2

In the above table, which plan is a flat-rate tax?
 
  A) only plan A
  B) only plan B
  C) only plan C
  D) both plan A and plan C

[amandalm]

Answer to Question 1

The price will not change. Any one perfectly competitive firm is such a small part of the market that a change in its output has virtually no effect on the price. This result is why the firm's marginal revenue equals its price: No matter how much (or how little) the firm produces, the marginal revenue from one more unit always equals the price of the product.

Answer to Question 2

A

[Mr3Hunna]

Thank you

[amandalm]

No problemo