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week8-082 - • Profit can be negative zero or positive •...

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1 Market Structure -- Firm s Environment is defined by Market Characteristics: 1.Number of firms and buyers 2.Similarity of product 3.Ease of entry into the industry Perfect Competition… Market demand and supply determines price Sellers and buyers are price-takers The Firm’s Decisions in Perfect Competition… Short Run Decisions Whether to produce or shut down? If the decision is to produce, what quantity to produce? Long Run Decisions Whether to stay in an industry or leave? Whether to increase or decrease plant size?
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