Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971493
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 14, Problem 1CQQ
To determine
To determine: The characteristic of the perfect competitive firm.
Expert Solution & Answer
Answer to Problem 1CQQ
Answer:
Option ‘c’ is correct.
Explanation of Solution
Option (c):
The competitive firm deals with the large number of buyers and sellers who trade homogeneous commodities, and the price is fixed by the market
Option (a):
A profit-maximizing price is set at the point where the marginal revenue of the firm is equal to marginal cost. But in the competitive market, price is set by the equilibrium between the market demand and supply. Thus, option ‘a’ is incorrect.
Option (b):
Undercut price is done in an oligopoly. Thus, option ‘b’ is incorrect.
Option (d):
The largest market share is the driven motive for the managers whose remuneration is based on the sales revenue. Thus, option ‘d’ is incorrect.
Economics Concept Introduction
Concept introduction:
Perfect competitive firm:
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Students have asked these similar questions
Which of the below changes in demand in the long-run would lead to entry in the perfectly competitive market for wheat?
a. a decrease in the number of buyers
b. a decrease in buyers' expected price of wheat
c. an increase in income (wheat is a normal good)
d. both a) and b) would lead to long-run entry in perfect competition
Ceteris paribus, if a firm in a perfectly competitive industry raises its price above market price,
Group of answer choices
a. total revenue for the firm will increase.
b. sales will drop to zero.
c.demand curves will become downward sloping.
d. profit will increase.
What is the correct answer?
In pure competition, if the market price of the product is lower than the
minimum average total cost of the firms, then
A. some firms will enter the industry and the industry supply will increase
B. other firms will exit the industry and the industry supply will decrease
C. some firms will exit the industry and the industry supply will increase
D. other firms will enter the industry and the industry supply will decrease
Chapter 14 Solutions
Principles of Microeconomics (MindTap Course List)
Ch. 14.1 - Prob. 1QQCh. 14.2 - How does a competitive firm determine its...Ch. 14.3 - Prob. 3QQCh. 14 - Prob. 1CQQCh. 14 - Prob. 2CQQCh. 14 - Prob. 3CQQCh. 14 - Prob. 4CQQCh. 14 - Prob. 5CQQCh. 14 - Prob. 6CQQCh. 14 - Prob. 1QR
Ch. 14 - Prob. 2QRCh. 14 - Prob. 3QRCh. 14 - Prob. 4QRCh. 14 - Prob. 5QRCh. 14 - Prob. 6QRCh. 14 - Prob. 7QRCh. 14 - Prob. 8QRCh. 14 - Prob. 1PACh. 14 - Prob. 2PACh. 14 - Prob. 3PACh. 14 - Prob. 4PACh. 14 - Prob. 5PACh. 14 - A firm in a competitive market receives 500 in...Ch. 14 - Prob. 7PACh. 14 - Prob. 8PACh. 14 - Prob. 9PACh. 14 - Prob. 10PACh. 14 - Suppose that each firm in a competitive industry...
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