Chapter 8: Q.13 (page 211)
What is a “price taker” firm?
In a perfect market, the price of a product is determined by market forces rather than by individual firms.
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Can you name five examples of perfectly competitive markets? Why or why not?
Do entry and exit occur in the short run, the long run, both, or neither?
What two lines on a cost curve diagram intersect at the shutdown point ?
Explain how the profit-maximizing rule of setting P = MC leads a perfectly competitive market to be allocatively efficient.
Why does entry occur?
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