a. What are the characteristics of the perfectly competitive firm b. Use 2 graph

Question

a.       What are the characteristics of the perfectly competitive firm

b.      Use 2 graphs to show why the perfect competitor is a 'price taker'

c.       Graph a short run economic profit position for a perfctly competitive firm - identify the profit maximizing level of output, the per unit cost, per unit revenue and the area of economic profit

d.      vary the ATC curve on the graph above to show how the firm can incur a normal profit or loss

e.       vary the industry price to show how the firm can go from an economic profit to a normal profit or loss

f.       Assume a firm is earning a short run economic profit. What will the profit position of this perfectly competitive firm in the long run? WHY?

g.      Illustrate how this would occur using the Industry and firm graphs.

Explanation / Answer

What are the characteristics of the perfectly competitive firm

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