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Chapter 8: Q2 (page 210)
Would independent trucking fit the characteristics of a perfectly competitive industry?
Yes, Independent trucking fits the characteristics of perfect competition.
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Assuming that the market for cigarettes is in perfect competition, what does allocative and productive efficiency imply in this case? What does it not imply?
A market in perfect competition is in long-run equilibrium. What happens to the market if labor unions are able to increase wages for workers?
The AAA Aquarium Co. sells aquariums for \(20 each. Fixed costs of production are \)20. The total variable costs are \(20 for one aquarium, \)25 for two units, \(35 for the three units, \)50 for four units, and $80 for five units. In the form of a table, calculate total revenue, marginal revenue, total cost, and marginal cost for each output level (one to five units). What is the profit-maximizing quantity of output? On one diagram, sketch the total revenue and total cost curves. On another diagram, sketch the marginal revenue and marginal cost curves.
Suppose that the market price increases to $6, as Table 8.14 shows. What would happen to the profit-maximizing output level?
What prevents a perfectly competitive firm from seeking higher profits by increasing the price that it charges?
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