Perfect Competition Market:

1.If a firm is a price taker, it does not have the ability to control the price of the product it sells. What does this mean?

2.The horizontal demand curve for the perfectly competitive firm signifies that it cannot sell any of its products for a price higher than the market equilibrium price. Why not?

3.Suppose the firms in a real-world market do not sell a homogeneous product. Does it necessarily follow that the market is not perfectly competitive?

4.If a firm produces the quantity of output at which MR = MC, does it follow that it earns profits?

5.If firms in a perfectly competitive market are earning positive economic profits, what will happen?

Monopoly

1.Why does the monopolist's demand curve lie above its marginal revenue curve?

2.Is a monopolist guaranteed to earn profits?

3.Is a monopolist resource allocative efficient? Why or why not?

4.A monopolist is a price searcher. Why do you think it is called a price searcher? What is it searching for?

5.What are some of the "costs," or shortcomings, of monopoly?