For a market to be perfectly competitive. there must be O A. many buyers and a tear sellers, with all rms sell'ng identical products, and no baniers to new rms entering the market. 0 B. many buyers and sellers, with all rms selling identical products, and no barriers to new rms entering the market. 0 C. many buyers and one seller, with the rm producing a product that has no dose substitutes. and barriers to new rms entering the market. 0 D. many buyers and sellers, with rms selling similar but not identical products, with law han'iers to new rms entering the market. 0 E. many buyers and a small number of rms that compete. selling differentiated products, and barriers to new rms entering the market. . What is a price taker? A price taker is O A. a rm with a downward-sloping demand curve. 0 B. a rm that is unable to affect the market price. 0 C. a rm with a perfectly inelastic demand curve 0 D. a rm that does not seek to maximize prots. 0 E. a rm that has the ability to charge a price greater than marginal cost. When are rms likely to be price takers? A rm is likely to be a price taker when 0 A. it sells a differentiated product. 0 8. rms in the industry collude. O c. It represents a small fraction of the total rrrsrlrel. O D. It has market power. 0 E. barriers to entry are substantial. \fAnd8) Q ) A $ 1. 80 In perfect competition P= MR= MC b ) () MR = $1.80 (i ) TR = $7.20 ( ii) MR= $1.80 ( iv ) TR = $12.60 MC , and after that MC > MR ) Profit = TR - TC = $28 - $495 = $8.5 AND A ) I Profit maximization = 6 bushels of what ( as till 6 bushels , MR 7 MC and after that MC > MR ) If MC increases by $0. 5, the profit maximization still remains the same at 6 bushels of wheat, So No Profit = TR - TC = $24 - $18 ( TC increases by $3 at 6 bushels) = $6 Definition Profit = TR-TC ( 1 ) yes Ans 6 ) ( D) their individual price is equal to the market price Ans 7 ) Profit Maximization = 4 thousand bushels of sugar. (MR is expanding till 4000 bushels, after that MC 7 MR) Profit = TR - TC = $400 - $320 = $80