Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

q23 and q24 please..thank you 23. In perfect competition firms set price equal to price. Why can't firms do this when there are internal economies

q23 and q24 please..thank you

image text in transcribed
23. In perfect competition firms set price equal to price. Why can't firms do this when there are internal economies of scale? Internal economies of scale imply that the firm can create entry barriers by setting the price lower than marginal cost. To keep competitor out of the market , the firm charges a price less than marginal cost. b, internal economies of scale imply decreasing average cost as output rises which also implies that marginal cost is less than average cost. If price is set equal to marginal cost, the firm will be making a loss. c. Internal economies of scale arise when the cost per unit falls as the industry grows larger, In this case the number of firms in the industry increases along with the firm's ability to set a price higher than marginal cost . d. This statement is not correct. Firms operating under internal economies of scale set price equal to marginal cost. 24. Under the model of monopolistic competition, a( an) in the number of firms in the industry will cause to a. increase; average price; decrease b. increase; marginal cost; decrease c. increase; average price; increase d. increase; average cost; decrease e. decrease, markup, decrease

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Microeconomics Principles, Problems, And Policies

Authors: Campbell McConnell

21st Edition

1259915727, 9781259915727

More Books

Students also viewed these Economics questions

Question

* What is the importance of soil testing in civil engineering?

Answered: 1 week ago

Question

Explain the concept of shear force and bending moment in beams.

Answered: 1 week ago

Question

Mortality rate

Answered: 1 week ago

Question

Armed conflicts.

Answered: 1 week ago