(a) Explain in your own words why price equals marginal cost in perfectly competitive markets. (b) If...
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(a) Explain in your own words why price equals marginal cost in perfectly competitive markets.
(b) If you draw out the long-run total cost function for a firm (with q on the horizontal axis, and $ on the vertical axis) it will go through the origin (the point (0, 0)), but this is not the case for the short-run cost function. Why?
(c) If you drew a firm’s short-run and long-run cost curves in the same graph, the short-run cost curve would always be above the long-run cost curve, except at one level of output. Why? What is special about this level of output?
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Making Hard Decisions with decision tools
ISBN: 978-0538797573
3rd edition
Authors: Robert Clemen, Terence Reilly
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