The behaviour of a firm depends on the features of the market in which it sells its product(s) and on its production costs. The following diagrams illustrate the possible short-run equilibrium positions of two firms. Firm A: MC AC AR = MR E Quantity Both firms employ the marginal approach to determine profit in the short-run. However, differ with regards to certain market structure criteria: The number of firms in the market The nature of the good or service sold Ease of entry for new competitors into the market Control that the firm has over price In scenario 7, the possible short-run equilibrium positions of two firms are given. With reference to "Firm A", answer the following question. 9.1 Identify the market structure of Firm A. 9.2 Using the marginal approach to determine profit, is Firm A making a short-run profit or loss? Explain your answer with reference to the provided diagram. Unit revenue and cost
The behaviour of a firm depends on the features of the market in which it sells its product(s) and on its production costs. The following diagrams illustrate the possible short-run equilibrium positions of two firms. Firm A: MC AC AR = MR E Quantity Both firms employ the marginal approach to determine profit in the short-run. However, differ with regards to certain market structure criteria: The number of firms in the market The nature of the good or service sold Ease of entry for new competitors into the market Control that the firm has over price In scenario 7, the possible short-run equilibrium positions of two firms are given. With reference to "Firm A", answer the following question. 9.1 Identify the market structure of Firm A. 9.2 Using the marginal approach to determine profit, is Firm A making a short-run profit or loss? Explain your answer with reference to the provided diagram. Unit revenue and cost
Chapter9: Perfect Competition
Section: Chapter Questions
Problem 13QP
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