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2001 AP Microeconomics Scoring Guidelines - AP Central
2001 AP Microeconomics Scoring Guidelines - AP Central

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chapter 8 - how firms make decisions

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... wheat per day wheat per day Market price ($5)- determined by the intersection of the market demand and market supply curves. A perfectly competitive firm can sell any amount at that price. The demand curve facing the perfectly competitive firm - horizontal at 5 the market price. ...
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... Limitations of the theory of perfect competition These are some of the more important reasons why perfect competition is rarely achieved in practice:  Perfect competition only applies where production techniques are simple and opportunities for economies of scale are few.  Markets are often domina ...
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... • Like a competitive firm, a monopolist maximizes profit by producing the quantity where MR = MC. • Once the monopolist identifies this quantity, it sets the highest price consumers are willing to pay for that quantity. • It finds this price from the D curve. ...
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... 1B. Consider a firm that sells a product in two isolated markets. Suppose that such a firm also has some monopoly power to influence the different prices it faces in the two markets by adjusting the quantity it sells in each. Economists generally use the term “discriminating monopolist” to describe ...
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... Pm and qm are the unregulated price and output. Pa and qa are the average cost price and output and Pc and qc are the marginal cost price and output. 5. The advantage of the unregulated price and output is that is does not cost the government anything to maintain and the firm has an incentive to see ...
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Perfect competition

In economic theory, perfect competition (sometimes called pure competition) describes markets such that no participants are large enough to have the market power to set the price of a homogeneous product. Because the conditions for perfect competition are strict, there are few if any perfectly competitive markets. Still, buyers and sellers in some auction-type markets, say for commodities or some financial assets, may approximate the concept. As a Pareto efficient allocation of economic resources, perfect competition serves as a natural benchmark against which to contrast other market structures.
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