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- Why is perfect competition assumed to be the best market situation in most cases? Draw a graph showing the long run result of perfect competition and explain why it benefits society.If you're a manager in a highly competitive business such where should you put your most effort to maximize profit? Pricing or cost cutting?You read in a business magazine that farmers are reaping high profits. With the theory of perfect competition in mind, what do you expect to happen over time (in the long run) to each of the following?
- Many firms, especially in perfectly competitive markets, file for bankruptcy every year, yet they still continue operating. Why would they do this instead of completely shutting down?When will a business shut-down in the short-run?Which are the most likely to be produced in a perfectly competitive industry?