Hello Chegg team, this is an economics subject. Please send me this answer.
Question 1:
Positive economic profit in a perfectly competitive market will increase market competition. Discuss (2 Marks)
Zero economic profit in the short run of a perfectly competitive market will end up becoming the long-run equilibrium of the market. Discuss (2 Marks)
Question 2:
What, if anything, does each one of the following tell you about the ease of entry into or exit from an industry?
Profits have been very high for two decades (1 Mark)
No new firms have entered the industry for 20 years (1 Mark)
Question 3:
The demand curve of a perfectly competitive market is horizontal and equal to the marginal revenue curve. However, the demand curve of a monopoly slopes downward with the marginal revenue curve below the demand curve.
Discuss the difference in the shape of the demand curve in both markets (1 Mark)
Discuss why the MR curve of the monopoly is below its demand curve while the competitive market is equal to AR (1 Mark)
Discuss the assertion "Monopolists are price-givers while perfectly competitive markets are price-takers" (2 Marks)