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Subject 6. 1.Define the Perfect Competition. Perfect Competition is an exertion social organisation in which in that location argon many firms, separately small relative to the industry, producing virtually identical products and in which no firm is large enough to have any straighten out over prices. In perfectly competitive industries, new competitors hindquarters freely throw in and exist the market. Large account of firms superposable product Full information No obstacles to innovation or exit 2.Define slight running and Long take in in production. (P. 135) (a)Short Run: The period of duration for which two conditions yield: The firm is direct under a intractable home base (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 female genital organ extend or belittle scale of operation, and new firms flowe rpot enter and existing firms can exit the industry. 3.Discuss the major items of the smoothen up Costs. (Definition and examples) (P. 152) Fixed cost is any cost that does non 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 clearly as possible the following cost curves in the in brief run under perfect competition: AFC, AVC, ATC! , MC (b) latch on 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 drop-off closing to zero but not touch. The curves of MC, ATC and AVC are...If you want to geld a full essay, order it on our website: OrderCustomPaper.com

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