chapter 6 perfect comp

Question 1

what are the main characteristics of perfect Competition

Answer 1

1. price taking–> horizontal demand curve
2. large number of buyers and sellers–> horizontal demand curve
3. homogenous products–> horuznatl demand curve
4. free entry and exit–> long run eq

Question 2

what are the three cases on whether a firm should shut down or continue producing

Answer 2

1. p> ATC at q–>positive profit
2. AVC< P< ATC–> is making a loss but still prpduces
3. p< AVC–> firm shuts down

Question 3

what is the profit formula in the short run

Answer 3

(p-atc)q

Question 4

short run supply curve

Answer 4

comes from mc

Question 5

firms producer surplus in the short run?

Answer 5

aka psi so tr-tvc

Question 6

direct market supply function

Answer 6

once u get it from mc, times it by the number of firms

Question 7

zero output

Answer 7

min avc= mc

Question 8

zero profit

Answer 8

min atc=mc