microeconomic assigment

Submission deadline: November 23, 2017

Marks: 10

1. Why a firm under perfect competition is called price taker? How the price is determined under perfectly competitive market? (4)

2. Explain what is shut down price. How does it guide a firm in its decision whether to continue to operate or make exit in case the firm under perfectly competitive market in the short run incurs loses? Use diagram. (6)