Chapter 8: Q16 (page 212)
How does a perfectly competitive firm calculate total revenue?
In perfectly competitive firm, Total Revenue = Price x Quantity
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Productive efficiency and allocative efficiency are two concepts achieved in the long run in a perfectly competitive market. These are the two reasons why we call them “perfect.” How would you use these two concepts to analyze other market structures and label them “imperfect?”
Briefly explain the reason for the shape of a marginal revenue curve for a perfectly competitive firm.
If new technology in a perfectly competitive market brings about a substantial reduction in costs of production, how will this affect the market?
Suppose that the market price increases to $6, as Table 8.14 shows. What would happen to the profit-maximizing output level?
Firms in a perfectly competitive market are said to be “price takers”—that is, once the market determines an equilibrium price for the product, firms must accept this price. If you sell a product in a perfectly competitive market, but you are not happy with its price, would you raise the price, even by a cent?
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