With internal economies of scale, it's likely that we will be observe a perfectly competitive market...

With internal economies of scale, it's likely that we will be observe a perfectly competitive market with firms of similar size. With external economies of scale, larger firms have lower cost, and markets become imperfectly competitive

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Expert Solution

Rahul Sunny answered 1 year ago

When business managers of firms in a competitive market observe falling profits, they are likely to...

When business managers of firms in a competitive market observe falling profits, they are likely to infer that the market is characterised by: A. a violation of conventional market forces B. rising prices C. too few firms in the market D. over-investment

Suppose we are studying the market for beer; the market for candy is perfectly competitive. There...

Suppose we are studying the market for beer; the market for candy is perfectly competitive. There are two types of firms that produce beer, Type A firms and Type B firms. The cost curve of type A firm is represented by CA(y) = y^2 + 5, and the cost curve of a type B firm is represented by CB(y) = ((y^2) / 2 ) + 10. In the short-run, there are 10 Type A firms in the market, and 15...

Why is it that if an industry is operating under conditions of internal scale economies then...

Why is it that if an industry is operating under conditions of internal scale economies then the resultant equilibrium cannot be consistent with the pure competition model?

2. In class we have seen that, in a perfectly competitive market, market equilibrium is efficient....

2. In class we have seen that, in a perfectly competitive market, market equilibrium is efficient. a. (5) What do economists mean by efficient? (i.e. Why do we characterize market equilibrium as efficient?) b. (5) What is missing in the concept of efficiency? Give an example of a market in which we might not be as concerned about maximizing efficiency.

6. If a market is perfectly competitive, then:

Perfect CompetitionWork Sheet #96. If a market is perfectly competitive, then: a. the market demand curve for the product is horizontal. b. the demand curve facing each individual seller is downward sloping. c. the demand curve facing sellers as a group and each individual seller is horizontal. d. the demand curve facing an individual seller is horizontal.7. Which of the following is characteristic of a purely competitive seller's (price taker's) demandcurve? a. It is the same as the market demand...

This question deals with internal economies of scale, when firms are not all identical and there...

This question deals with internal economies of scale, when firms are not all identical and there is an option to engage in horizontal foreign direct investment (FDI). This entails paying some fixed cost (F) to set up a plant in a foreign country. Setting up a plant means that firms do not have to pay the per unit export cost (t) when selling units of output to the foreign country. You can think of firms as differing in terms of...

1. In the monopolistic competition model with internal economies of scale, which of the following is...

1. In the monopolistic competition model with internal economies of scale, which of the following is NOT an element of the gains from trade? more varieties available to consumers lower price lower average cost 2. With trade based on economies of scale, we expect to see specialization incomplete specialization we cannot say without more information No answer text provided. Intra industry trade refers to trade of different goods within the same industry within the same country across different industries lower...

A. Explain what external and internal economies of scale are and why the supply curve in...

A. Explain what external and internal economies of scale are and why the supply curve in their case is shaped as “forward-falling”. B. What may cause one country to have an initial advantage from having a lower price? Discuss and give an example. C. Define what increasing returns to scale represents in the context of a production function. D. Can trade hurt a country when there are external economies of scale? Give an example with a 2-country 2-good model and...

Suppose there is a perfectly competitive market for curry puffs. The perfectly competitive equilibrium price in...

Suppose there is a perfectly competitive market for curry puffs. The perfectly competitive equilibrium price in this market is RM5 per puff. The perfectly competitive equilibrium quantity is 5,000 curry puffs. (a) Using a diagram, illustrate the perfectly competitive equilibrium in the market for curry puffs. Clearly label the areas of consumer surplus, producer surplus, and social surplus at this equilibrium. [3 marks] (b) Suppose that the government introduces a price floor for curry puffs at RM7 each. Note: Use...

Suppose we have a perfectly competitive market where at the equilibrium price the total market demand...

Suppose we have a perfectly competitive market where at the equilibrium price the total market demand is 300 units. Each individual firm in the market has a cost function C(Q) = 50 -2Q + 0.4Q^2. The number of firms this market can support in the long run is _____?

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