Perfect competition - numerical
Question 1
Examine the diagram that is given below, which represents a firm in a perfectly competitive market.
What price would the firm require to:
(i) stay in the market in the long run
(ii) stay in the market in the short run
(iii) leave the market at once
Question 2
It is known that a firm is operating in a perfectly competitive market. Its situation is summarised in the table of data that follows.
| Sales/production | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
|---|---|---|---|---|---|---|---|---|
| Total revenue | 0 | 30 | 60 | 90 | 120 | 150 | 180 | 210 |
| Total cost | 10 | 40 | 60 | 70 | 80 | 100 | 130 | 160 |
What price would the firm require to:
(i) stay in the market in the long run?
(ii) stay in the market in the short run?
(iii) leave the market at once?
Is the firm in long or short run equilibrium?
