Some things to think about in re: to perfect competition...
It's 4/5th hour, so I'm not positive how far we'll get, so this may be further along than we are in class. :)
1. The licorice industry is competitive. Each firm produces 2 million strings of licorice in a year. The strings have an average total cost of $.20 each, and they sell for $.30.
(a) What is the marginal cost of a string?
(b) Is this industry in long run equilibrium? Why or why not?
2. Bob's lawn mowing service is a profit-maximizing, competitive firm. Bob mows lawns for $27 each. His total cost each day is $280, of which $30 is a fixed cost. He mows 10 lawns a day. What can you say about Bob's short run decision regarding shut down and his long run decision regarding exit from the market?
3. Your best friend's long hours in the chemistry lab have finally paid off - she discovered a secret formula that allows people to do an hour's worth of studying in 5 minutes. So far, she's sold 200 doses, and faces the following ATC schedule: (Q--ATC) 199 -- $199, 200 -- $200, 201 -- $201. If a new customer offers to pay your friend $300 for one dose should she make one more? Explain.
I'm off to read rough drafts! I should be able to hand a couple back today that were emailed to me earlier this week - otherwise, my goal is to have them back to you on Monday. We'll see how that goes...then, you have a week to rewrite - they're due on M 3/19. :) (Wow, the 3rd quarter ends that Friday after that, already!)