Question

1. Give an example of a perfectly competitive market (or one that closely approximates one) except those given in chapter 5. Explain why you believe this market is competitive. If you can’t think of such a market, explain why it is difficult to find a perfectly competitive market. Be specific.
2. Give an example of a market that is not currently perfectly competitive but could become one, or at least more competitive, under certain possible circumstances. What are those circumstances and how will they make a market (more) competitive?
3. If (perfectly) competitive firms are price takers, how can such a firm make any economic profit in the short run? Can such a firm continue to make economic profit in the long run/ Why/how/why not? Explain.
4. “Competitive markets provide efficient quantity of goods and services at minimum cost to the consumers”. Do you agree with this statement? Why (not)? Justify your answer with concepts covered in the textbook (in chapters 2 and 5).

Answer 1