Chapter 10 discussion questions.docx - Chapter 10...

Chapter 10
Discussion Questions
1. Explain why a perfectly competitive firm does not expand its sales without limit if its
horizontal demand curve indicates that it can sell as much as it desires at the current
market price.
3. Regarding the four attributes of perfect competition (many small firms, freedom of
entry, standardized product, and perfect information):
a. Which is primarily responsible for the fact that the demand curve of a perfectly
competitive firm is horizontal?
b. Which is primarily responsible for the firm’s zero economic profits in long-run
equilibrium?