In principle, how do we determine a perfectly competitive firm's profit-maximizing output and maximum profits given information about the market clearing price, and about the marginal cost and average total cost curves of the firm? Explain in words.

1. In principle, how do we determine a perfectly competitive firm's profit-maximizing output and maximum profits given information about the market clearing price, and about the marginal cost and average total cost curves of the firm? Explain in words.

2. Can a firm make losses by producing the rate of output at which marginal revenue equals marginal cost? Why?

3. What determines the perfect competitor's supply curve? How is the industry supply curve found?

4. Why would it be economically inefficient for a firm to charge the price of a good greater than its marginal cost?

5. What is a price taker? Discuss the assumptions used to obtain the perfectly competitive model.

6. Why would economies of scale be a barrier to entry?

7. What is the main difference between the demand curves for the perfect competitor and the monopolist?

8. How does a monopoly maximize profits? What price does it charge?

9. Explain what will happen if firms in a monopolistically competitive industry are earning positive economic profits.

10. Explain how the prisoners' dilemma can be used to examine pricing strategies in an oligopoly.