Define market power-perfect competition

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Reference no: EM133131863

REQUIRED TEXTS:

Principles of Economics, 7th edition, Jeff Holt

ISBN: 978-0-7380-9492-2

2019 Macmillan Learning Curriculum Solutions

Chapter - 21

Define: market power, perfect competition, two reasons why a perfect competitor has no market power

Using Example 4, what is the maximum price that this perfect competitor can charge for their product?

In order to maximize profits, a perfect competitor will produce to the level (quantity) where marginal revenue (the additional revenue brought to the company from selling the last product) equals marginal cost (the additional cost incurred by the company for having produced the last product). Using this information, and Example 6B, what is the optimum level of output (quantity) for the company depicted there?

Using Example 6C: Follow horizontally on the line that corresponds to a quantity of 6. Note that at this level of output (quantity) MR = MC, or $10 = $10, so this is the most profitable level of output (quantity). Note that at this level ATC (Average Total Cost) is $9.50 per unit. Based on a selling price of $10, each unit produces $.50 profit times a quantity of 6 units which yields a $3 profit (last column). Using the same horizontal line, how is the TR (Total Revenue) value of $60 determined, as well as TC (Total Cost) value of $57 determined?

Reference no: EM133131863

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