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Paul [167]
2 years ago
8

in the theory of percect competition the assumption of easy entry into and exit from the market implies

Business
1 answer:
jeka942 years ago
3 0

In the theory of perfect competition, the assumption of easy entry into and exit from the market implies <u>zero economic profits in the long run.</u>

<u />

<h3>What Is Perfect Competition?</h3>

The term perfect competition refers to a theoretical market structure. In a perfect competition model, there are no monopolies.

This kind of structure has a number of key characteristics, including:

  • All firms sell an identical product (the product is a commodity or homogeneous).
  • All firms are price takers (they cannot influence the market price of their products).
  • Market share has no influence on prices.
  • Buyers have complete or perfect information (in the past, present, and future) about the product being sold and the prices charged by each firm.
  • Capital resources and labor are perfectly mobile.
  • Firms can enter or exit the market without cost.

There are five assumptions in the perfectly competitive model of markets:

  1. Goods are identical, rival, and excludable.
  2. Buyers and sellers have sufficiently information to make informed decisions.
  3. There are no external effects; and two others. List the two other assumptions and discuss their significance in a sentence or two.
  4. Everyone is a price taker.
  5. There is free entry and exit.

The price taking assumption implies the demand perceived by a seller is perfectly elastic. That is, they can sell as much or as little as they want without affecting the market price. Also, when the firm is a price taker, the profit maximizing rule: MR = MC, can be written P = MC since price equal marginal revenue in perfect competition. The market output where price equals marginal cost is the level the level of output where the sum of consumer and producer surplus is maximized.

The free entry and exit assumption insures economic profits are zero in the long-run and more importantly, resources are perfectly mobile in response to a change in demand or supply conditions.

If demand for a good increases, for example, firms will experience short-run profits, which will induce an expansion of the industry. The increased supply lowers price until profits are zero for the typical supplier.

Therefore, we can conclude that the correct option is C.

Your question is incomplete, but most probably your full question was:

In the theory of perfect competition, the assumption of easy entry into and exit from the market implies

a. positive economic profits in the long run.

b. losses in the long-run equilibrium.

c. zero economic profits in the long run.

d. zero economic profits in both the short run and the long run.

e. positive economic profits in both the short run and the long run.

Learn more about Perfect Competition on:

brainly.com/question/1488584

#SPJ4

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Answer:

37,000 units

Explanation:

The computation of the total equivalent units for direct material is shown below:

= Transferred to finished goods during the month of July + Ending work in process during the month of July - Inventory in process as on July 1

= 37,500 units + 3,500 units - 4,000 units

= 41,000 units - 4,000 units

= 37,000 units

We simply used the above formula so that the total equivalent units for direct materials using the FIFO method could come

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5 0
3 years ago
The cost of direct materials transferred into the Filling Department of Eve Cosmetics Company is $91,050. The conversion cost fo
kupik [55]

Answer:

  • Cost of Direct material per unit  = $1.50 per unit
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3 years ago
Legacy issues $570,000 of 8.5%, four-year bonds dated January 1, 2019, that pay interest semiannually on June 30 and December 31
Doss [256]

Answer:

journal entry  based on straight line method are given below

Explanation:

given data

issues = $570,000

rate = 8.5 %

time = 4 year

issued = $508,050

market rate = 12%

to find out

prepare journal entry

solution

journal entry  based on straight line method

date                    general journal                              Debit             Credit  

June 30               bond interest expenses                $31969  

                            Discount on Bonds payable                                $7744

                             = (570000-508050 ) ÷ 8

                              Cash = 570000 × 8.5% ÷ 2                                $24225

December 31       Bond interest expense                  $31969  

                            Discount on Bonds payable                                $7744

                             = (570000-508050 ) ÷ 8

                              Cash = 570000 × 8.5% ÷ 2                                $24225

5 0
3 years ago
3.10 What will be the amount accumulated by each of these present investments? (a) $5,000 in 5 years at 7% compounded annually.
Ostrovityanka [42]

Answer:

1) FV =7012.76

2) FV =26408

3) FV  ==61565.31

4) FV =18416.24

Explanation:

The  formula used for calculation of future value for given present investment is given as

FV = PV ( 1 + I )ⁿ

1) for PV = 5000, n = 5 year, I =  7%

 

FV = 5000*(1.07)^5

FV =7012.76

2) for PV = 7200, n = 15 year, I =  9%

FV= 7250*(1.09)^15

FV =26408

3) for PV = 9000, n = 33 year, I =  6%

FV= 9000*(1.06)^33

FV  ==61565.31

4) for PV = 12000, n = 8 year, I =  5.5%

FV = 12000*(1.055)^8

FV =18416.24

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