WHY FIRMS IN A PERFECTLY COMPETITIVE MARKET PRODUCE AT THEIR EFFICIENT SCALES WHEN THEY ACHIEVE THEIR LONG RUN EQUILIBRIUM?
You are asked to answer the following questions: Q1. Why firms in a perfectly competitive market produce at their efficient scales when they achieve their long run equilibrium? Q2. When a country allows trade and becomes an exporter of a good, who will become better off and who will become worse off compared to the state without international trade, why? Please use the economic model to explain it. Q3. Compare the differences and similarities among monopolistic competition and monopoly. (Notes: using the appropriate economic models is suggested; Features compared include the basic attributes of different firms, rule for maximizing profit, how firms achieve their maximum profits, the short-run and long-run equilibrium for these firms and their economic profit in the short run and in the long run.)