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SingaporeEconomicsQuick questions
Firms and How They Operate
Quick questions on Perfect competition explained: H2 Economics
5short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is the price-taking firm?Show answer
Because the firm is a price taker, it faces a horizontal demand curve at the market price, so:
What is short-run equilibrium?Show answer
In the short run the market price can sit above, at, or below average cost, so the firm can earn supernormal profit, normal profit, or make a loss:
What is q1?Show answer
State two assumptions of perfect competition. [2 marks]
What is q2?Show answer
Explain why long-run profit is only normal in perfect competition. [3 marks]
What is q3?Show answer
State the condition for allocative efficiency and confirm perfect competition meets it. [2 marks]
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