If the industry under perfect competition faces a downward-sloping demand curve, why does an individual firm face a horizontal demand curve?
Answer to relevant QuestionsIf supernormal profits are competed away under perfect competition, why will firms have an incentive to become more efficient?Are there any shops in your area that stay open later than others? If so, does this affect the prices they charge? Why do you think this is?‘A firm will always prefer to make more profit rather than less.’ Do you agree with this statement? Is it compatible with alternatives to the profit-maximizingtheory of the firm?Given the analysis of bilateral monopoly, if the passingof minimum wage legislation forces employers to payhigher wage rates to low-paid employees will thisnecessarily cause a reduction in employment?How would you go about deciding whether person A or person B gets more personal benefit from each of the following?(a) An electric fire; (b) A clothing allowance of £x; (c) Free higher education; (d) Child benefit? Do your ...
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