1. What are the main characteristics of a perfectly competitive market that cause buyers and sellers to be price takers?
2. A perfectly-competitive firm (a firm that operates in a perfectly competitive market) has the following cost function:
TC = 2000 + 10Q + 0.02Q^2
The market price is $25, so that TR = PQ = 25Q.
What is the optimal (profit-maximizing) output level?
What is MR at that level?
What is MC at that level?
What is the profit at that level?
3. Explain a monopolist's output and price decisions.
4. A monopoly firm has the following cost function:
TC = 10000 + 100Q + 0.02Q^2
and it faces a market demand function:
Q = 20000 - 100P
What is the firm's optimal (profit-max) output?
What is the profit-maximizing price that the firm charges?
What is the maximum profit?
Please refer to attached word document.
A monopolist's output and price decisions are explicated.
Competitive Market Characteristics
Choose a market for a good in your area that seems to be a perfectly competitive market.
Answer the following questions:
Identify the buyers and sellers as well as the goods or services.
How closely do real world conditions match the characteristics listed in the model?
Are the sellers price takers?
Do they compete using price?
Is the good in question standardized?
Is this market regulated by government in any way?
Explain the competitive environment.