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Perfect competition - short answer


Question 1

Explain why a market for shares may be considered to approximate perfect competition.

Question 2

Is it possible for a firm in perfect competition to make supernormal profits?

Question 3

A firm in a perfectly competitive industry finds that it is trying to sell its product at a price above the prevailing market price. What can it do about the situation?

Question 4

What does the term 'freedom of entry and exit' to the market mean?

Question 5

Draw and explain the models for a firm and an industry in a perfectly competitive market in the long run.

Question 6

Will you find advertising in a perfectly competitive industry?

Question 7

It is an assumption of perfect competition that, in the long run, no firm makes supernormal profits, only normal profit. Does that mean that all firms in perfect competition make the same level of profit?

Question 8

Examine the data below, which is for 4 different firms.

Revenue data (Łk) for four firms

Sales 0 1 2 3 4 5
A 0 10 20 30 40 50
B 0 30 60 90 120 150
C 0 50 95 135 170 155
D 0 40 80 120 160 200

All of the firms are in perfectly competitive industries except?

Question 9

Discuss the main problems with perfect competition.

Question 10

Why is the existence of perfect competition unlikely in the real world?