PROFIT MAXIMISATION AND COMPETITIVE SUPPLY

1 Explain why an individual firm can be a price taker even though the entire market demand for its product may be downward sloping.

2 Why is the assumption of profit maximization sometimes referred to as marginal behaviour?

3 In the long-run equilibrium, all firms in the industry earn zero economic profit. Why is this true?

4 Why would a firm stay in an industry that only promised zero long-run profits?

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Sonal BahlLv10

29 Sep 2019

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19 Nov 2020

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