What are the main characteristics of a competitive market?
What do firms in a PC maximize?
Draw MC, AVC and ATC making a + profit for a perfectly competitive firm. Show on your graph where the firm is making a + profit.
Under what conditions will the firm shut down?
Under what conditions will the firm exit the market?
Does a competitive firm's price equal its marginal cost in the short run, in the long run, or both? Explain.
Does the frim's price equal the minimum of its average total cost in the short run, in the long run, or both? Explain.
Are market supply curves more or less elastic in the long run?