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Look at Table $8.13 .$ What would happen to the firm's profits if the market price increases to $\$ 6$ per pack of rasperries?

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Chapter 8

Perfect Competition

How Markets Work

Firm Behavior and the Organization of Industry

Abigail D.

April 5, 2022

five exmples of perferct competiton

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since a perfectly competit…

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so they fear the answer. This problem that we have to figure out what exactly are the conditions necessary to for a perfectly competitive firm to reach its profit maximizing output level? So that is a a fancy way of saying we need the place where in marginal benefit equals marginal cost. So we just need to figure that out. So we have our marginal cost in this. Ah, this column of our table here, we just need to find the marginal benefit. Now, we actually get this in the problem because the market price is equal. That's $6. So the market price is what the firm would, uh, get as compensation for their work so their cost would be whatever's in this column and whatever they sell their output four would be their marginal benefit. So we get that the marginal benefit is equal to $6 in the problem. So we just need to find out where is marginal. Cost equals $26. So we see that it is $6 right here and that are marginal revenues $6 right here and that is a that is at a quantity of 90 units. So the profit maximizing profit maximizing output level is equal to 90 units

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