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Subject 6. 1.Define the Perfect Competition. Perfect Competition is an exertion bodily structure in which in that location argon many firms, from each one small relative to the industry, producing virtually identical products and in which no firm is large enough to have any develop over prices. In perfectly competitive industries, new competitors posterior freely throw in and exist the market. Large spell of firms superposable product Full information No obstacles to entranceway or exit 2.Define slight running and Long rule in production. (P. 135) (a)Short Run: The period of quantify for which two conditions intromit: The firm is direct under a intractable scurf (fixed factor) of production, and firms cajn neither inscribe nor exist an industry. (b)Long Run: That period of time for which there are no fixed factors of production: Firms bear extend or belittle scale of operation, and new firms tummy enter and existing firms can ex it the industry. 3.Discuss the major items of the smoothen up Costs. (Definition and examples) (P. 152) Fixed cost is any cost that does not depend on the firms level of output. These be are incurred even if the firm is producing nothing. There are no fixed costs in the long run, i.e.

, Rent on 5-10 twelvemonth commercial lease, Specialized machineries Salaries of high echelon managers Licenses and permits 4.Each sub-question of (a) to (e) is treated as a separate question. (a)In a diagram, draw as all the way as possible the following cost curves in the short-circuit run under perfect competition : AFC, AVC, ATC, MC (b) take over t! he major characteristics of these curves in (a) AFC (Average Fixed Cost) AVC (Average Variable Cost) ATC (Average Total Cost) MC (Marginal Cost) (AFC is downward sloping and it is continuously declining without minimum point. However, it would not be zero or negative, because AFC = TFC/q. While TFC remains the same, when the quantity increase, AFC light closing to zero but not touch. The curves of MC, ATC and AVC are...If you want to slenderize a full essay, order it on our website: OrderCustomPaper.com

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