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Unformatted text preview: (b) Draw a rough graph of average cost (c) If price is 8, what is the average cost of a perfectly competitive ﬁrm? (d) Would this ﬁrm like to stay in the industry or exit? Does the answer depend on whether the ﬁrm can recover its ﬁxed cost on exiting (i.e. whether the ﬁxed costs are sunk?) 5. List at least 4 conditions necessary for “perfect competition.” 6. Is a Pareto Eﬃcient outcome the “best” outcome? Why or why not? 1...
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This note was uploaded on 04/08/2008 for the course ECON 115 taught by Professor Stevenberry during the Fall '07 term at Yale.
 Fall '07
 StevenBerry
 Economics

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