Chapter 8: Q.15 (page 212)
What prevents a perfectly competitive firm from seeking higher profits by increasing the price that it charges?
When a perfective competitive firm raises the price of its product in order to earn a large profit, all of its customers switch to its competitors.
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How does the average variable cost curve help a firm know whether it should shut down immediately?
Many firms in the United States file for bankruptcy every year, yet they still continue operating. Why would they do this instead of completely shutting down?
A single firm in a perfectly competitive market is relatively small compared to the rest of the market. What does this mean? How “small” is “small”?
Will a perfectly competitive market display productive efficiency? Why or why not?
If new technology in a perfectly competitive market brings about a substantial reduction in costs of production, how will this affect the market?
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