What assumptions are necessary for a market to be perfectly

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1. Can there be constant returns to scale in an industry with an upward-sloping supply curve? Explain.

2. What assumptions are necessary for a market to be perfectly competitive? In light of what you have learned in this chapter, why is each of these assumptions important?

3. Suppose a competitive industry faces an increase in demand (i.e., the demand curve shifts upward). What are the steps by which a competitive market insures increased output? Will your answer change if the government imposes a price ceiling?

Reference no: EM13321648

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