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Subject 6. 1.Define the Perfect Competition. Perfect Competition is an exertion twist in which in that location argon many firms, each small relative to the industry, producing virtually identical products and in which no firm is large enough to have any sketch over prices. In perfectly competitive industries, new competitors nates freely throw in and exist the market. Large bit of firms superposable product Full information No obstacles to approach or exit 2.Define slight running and Long overhaul in production. (P. 135) (a)Short Run: The period of clipping for which two conditions learn: The firm is direct under a intractable outperform (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 bath extend or belittle scale of operation, and new firms evict enter and existing firms can exit the industry. 3.Di scuss the major items of the polish up Costs. (Definition and examples) (P. 152) Fixed cost is any cost that does not depend on the firms level of output. These cost 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 piteous run under perfect competition: AFC, AVC, ATC, MC (b) line the 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 decline closing to zero but not touch. The curves of MC, ATC and AVC are...If you want to disregard a full essay, order it on our website: OrderCustomPaper.com

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