QUESTIONS FOR REVIEW

1. What is meant by a competitive firm?

2. Draw the cost curves for a typical firm, For a given price, explain how the firm chooses the level of output that maximizes profit.

3. Under what conditions will a firm shut down temporarily? Explain.

4. Under what conditions will a firm exit a market? Explain.

5. Does a firm’s price equal marginal cost in the short run, iDthe long run, or both? Explain.

6. Does a firm’s price equal the minimum of average total cost in the short run, in the long run, or both? Explain.

7. Are market supply curves ~cally more elastic in the short run or in the long run? Explain

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