PERFECTLY COMPETITIVE MARKETS a. What are the characteristics of a perfectly competitive market? b. What is the criterion used by individual firms in perfectly competitive markets when deciding whether to shutdown or continue production in the short run? c. What is the criterion used by individual firms in perfectly competitive markets when deciding whether to exit the market or continue production in the long run? d. What does the market supply curve in a perfectly competitive market look like in the short run and in the long run? Explain the reason behind the shapes of these market supply curves. e. What is the theoretical justification for supporting the creation of competitive markets? (Hint: Think about welfare economics, ie: consumer surplus, producer surplus, total surplus.)

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Suppose the marginal damage and marginal benefit curves in a polluted neighborhood are md = p/3 and mb = 4 – p. also, suppose that transactions costs are low, so that the consumers and the firm can bargain. we saw that in this case, the socially-optimal level of pollution is achieved. start by computing the socially-optimal p. then, for each of the following cases, compute the amount of money transferred through the bargaining process, and indicate who pays whom (i.e., whether consumers pay the firm, or vice versa). also, compute the gains to each party relative to the status quo (i.e., the starting point of the bargaining process).a)consumers have the right to clean air; firm is dominant in the bargaining process.b)consumers have the right to clean air; consumers are dominant in the bargaining process.c)firm has the right to pollute; firm is dominant in the bargaining process.d)firm has the right to pollute; consumers are dominant in the bargaining proces

For a firm that uses the weighted average method of process costing, which of the following must be true? (a) physical units can be greater than or less than equivalent units. (b) physical units must be equal to equivalent units. (c) equivalent units must be greater than or equal to physical units. (d) physical units must be greater than or equal to equivalent units.