Author Question: What are the pros and cons of a competitive market in the long ... (Read 47 times)

shofmannx20 · **on:** Jun 30, 2018

What are the pros and cons of a competitive market in the long run?

Question 2

The total utilities associated with the first 5 units of consumption of good X are 15, 30, 40, 47, and 50, respectively. What is the marginal utility associated with the third unit?
a. 15.
b. 70.
c. 85.
d. 10.
e. 45.

aadams68 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

The pros include price equals minimum average total costs and marginal cost. Also, only a normal profit is earned in the long run. The major drawback of a competitive market is that it usually does not promote technological advances (because competitive firms do not earn the profits necessary to enable long-term investments in research and development).

Answer to Question 2

d