7.7. You are a business manager working for a firm in a purely competitive market and...

7.7. You are a business manager working for a firm in a purely competitive market and you just hired a summer intern who does not understand how to derive the firms’ short run supply curve from the firms’ marginal cost curve.
a. Please explain to the intern how the short run supply curve is derived from the firm’s marginal cost curve. Be specific.
b. Please explain to the intern the characteristics of long run equilibrium of a purely competitive firm and how operating in a purely competitive market might impact the decision-making of the firm. Please include the implications of long-run equilibrium for productive and allocative efficiency.

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Expert Solution

Rahul Sunny answered 1 year ago

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