Question

1-What are the main characteristics of a competitive market?

2-Explain the difference between a firm's revenue amd its profit. Which do firms maximize?

3-Under what conditions will a firm shut down temporarily? explain

4-Give an example of a government-created monopoly. Is creating this monopoly necessarily bad public policy? explain

5-What gives the government the power to regulare mergers between firms? Give a good readon and a bad reason (from the perspective of society's welfare) that two firms might want to merge.

6-how might advertising reduce economic well-being? How might advertising increase economic well-being?

7-Explain two benefits that might arise from the existence of brand names.

Answer 1

1) :-Competitive Market is defined as a market where many buyers and sellers buying and selling identical products so that each buyer and seller is a price taker the main characteristics of a competitive market are:-

There are main buyers and sellers

it is easy to enter and exit the market,

All firm sell homogeneous products (all the products are virtually the same), and

Profit maximization take place when MC=MR

2) :-Firm's revenue refers to the price of goods, and its time to number of goods sold while its profit refers to total revenue minus total cost of producing the goods

Firm Will maximize profit

3) :-In the short run, when a firm is unable to earn its fixed cost in that conditions , the firm will choose to shut don temporarily there is also second conditions in which if the firm earn price of the good which is less than the average variable cost then firm Will shut down temporarily.