Consider a perfectly competitive market where variable input markets are also perfectly competitive but not all firms have the same fixed cost. a. Draw the two-panel competitive model and derive and explain, via a change in demand, the market long run supply curve. b. Explain the difference between profit and producer surplus, in general. Discuss long run profitability for firms and producer surplus (where it comes from and who gets it) in the situation graphed in part a.

Consider a perfectly competitive market where variable input markets are also perfectly competitive but not all firms have the same fixed cost. a. Draw the two-panel competitive model and derive and explain, via a change in demand, the market long run supply curve. b. Explain the difference between profit and producer surplus, in general. Discuss long run profitability for firms and producer surplus (where it comes from and who gets it) in the situation graphed in part a.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 1SCQ: Firms ill a perfectly competitive market are said to be price takers that is, once the market...

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