Economics Assignment with Solutions and Diagrams

Running head: ECONOMICS ASSIGNMENT
Economics Assignment
University Name
Student Name
Authors’ Note

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ECONOMICS ASSIGNMENT
Table of Contents
Solution to Question 1:...............................................................................................................2
Solution to Question 2:...............................................................................................................4
Solution to Question 3:...............................................................................................................7
References..................................................................................................................................9

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ECONOMICS ASSIGNMENT
Solution to Question 1:
Perfectly competitive market:
Cherries are sold in a market that is perfectly competitive in nature. Perfect competition is a
specific market structure in which there are several firms offering a homogeneous product.
As there is freedom of both entry as well as exit along with perfect information, business
concerns are expected to acquire normal profits (Baumol and Blinder 2015). The level of
prices is also at a comparatively low level owing to competitive pressures.
Primary features of perfect competition:
- There are many firms operating in the specific market
- There is freedom of entry as well as exit (Iossa and Martimort 2015)
-All the firms produce an identical or else a homogeneous product
-There is subsistence of perfect knowledge
Diagrams explaining perfect competition