Assignment:
The Theory of the Firm
1. What are the three general rules for the profit maximization for a competitive market?
2. In a competitive market, when does a firm decide to shut down in the short run? Use a graph to illustrate.
3. When does a competitive firm decide to exit a market completely? Explain. Use graphs to illustrate.
4. Why do some markets only have one seller? Give three examples and explain the reason for each.
5. How does a monopolist choose the quantity of output to produce and the price to charge?
6. Give two practical examples of price discrimination.