Short Answer TypeWhat is the behaviour of average revenue in a market in which a firm can sell more only by lowering the price?
Draw Average Variable Cost, Average Total Cost ad Marginal Cost curves in a single diagram.
An individual is both the owner and the manager of a shop taken on rent. Identify implicit cost and explicit cost from this information. Explain.
Explain the implication of large number of buyers in a perfectly competitive market.
The number of buyers and sellers operating under perfect competition is very high. As the number of individual sellers very large, an individual seller cannot fix the price. Similarly no single buyer can fix the price or change it by his action. Even if he increases or reduces demand, it does not make any effect on the total demand in the market. Price of a product is determined by the interaction of total demand and total supply in the market. Hence every seller and buyer under perfect competition is a price taker and not a price maker.
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