please answer these 4 questions 3

1. Explain in detail why a perfectly competitive firm can maximize its profits by producing a quantity where the price equals the firm’s marginal cost.

2. Explain in detail the conditions that would cause firms to enter or exit a perfectly competitive market. What is the effect of this entrance and exit on the market and long-run profitability of competitive firms?

3. Why do perfectly competitive firms stay in business if they make zero economic profits? Explain in detail.

4. Many small boats are made of fiberglass and a resin derived from crude oil. Suppose that the price of oil rises. What happens to the profits of boat makers in the short-run? What happens to the number of boat makers and their profits in the long-run?

 

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