« previous next »

Author Question: Why is the demand for a perfectly competitive firm's good perfectly elastic even though the market ... (Read 175 times)

kfurse

  • Hero Member
  • *****
  • Posts: 590
on: Jun 29, 2018
Why is the demand for a perfectly competitive firm's good perfectly elastic even though the market demand is not?
 
  What will be an ideal response?

Question 2

Economies of scale refer to the range of output over which
 
  A) marginal cost exceeds average cost.
  B) the long-run average cost falls as output increases.
  C) the marginal product of labor diminishes.
  D) the long-run average cost is less than the short-run average total cost.


ambernicolefink

  • Sr. Member
  • ****
  • Posts: 359
Reply #1 on: Jun 29, 2018
Answer to Question 1

Each firm takes the market price as given. Because each firm's good can be perfectly substituted with any other firm's product, consumers will only pay the market price. Hence, any deviation above the market price causes the firm's sales to plunge to zero and any deviation below causes the firm's sales to soar to the entire amount sold in the market.

Answer to Question 2

B


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Immunoglobulin injections may give short-term protection against, or reduce severity of certain diseases. They help people who have an inherited problem making their own antibodies, or those who are having certain types of cancer treatments.

Did you know?

Less than one of every three adults with high LDL cholesterol has the condition under control. Only 48.1% with the condition are being treated for it.

Did you know?

As many as 28% of hospitalized patients requiring mechanical ventilators to help them breathe (for more than 48 hours) will develop ventilator-associated pneumonia. Current therapy involves intravenous antibiotics, but new antibiotics that can be inhaled (and more directly treat the infection) are being developed.

Did you know?

People often find it difficult to accept the idea that bacteria can be beneficial and improve health. Lactic acid bacteria are good, and when eaten, these bacteria improve health and increase longevity. These bacteria included in foods such as yogurt.

Did you know?

The longest a person has survived after a heart transplant is 24 years.

Non-competitive inhibition Non-competitive inhibition
Effects of competitive inhibition on enzyme kinetics Effects of competitive inhibition on enzyme kinetics
The population of Asia increases rapidly, the demand for food and water is also growing The population of Asia increases rapidly, the demand for food and water is also growing
Potatoes are a good source of complex carbohydrates Potatoes are a good source of complex carbohydrates
Stock Market Question Stock Market Question
Suppose the market supply curve is p = 5Q. If price increases from 10 to 15, the change in ... Suppose the market supply curve is p = 5Q. If price increases from 10 to 15, the change in ...
Video: Types of synapses - electrical & chemical

For a complete list of videos, visit our video library