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The Theory Of The Firm Under Perfect Competition

Question

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Why does a surplus emerge in case of support price?

Solution

Surplus emerges because supply exceeds demand due to support price which is always higher than equilibrium price.

Some More Questions From The Theory Of The Firm Under Perfect Competition Chapter

Define perfect competition.

Is the seller under perfect competition a price maker or a price taker?

Define monopoly.

Define market equilibrium.

Can a seller under monopolistic competition influence the price?

Why under imperfect competition, MR is less than price?

Why is demand for a good under monopoly less elastic than in monopolistic competition?

What is meant by the term equilibrium?

What is an equilibrium price?

What is the condition for determination of equilibrium price?

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