Answer+to+chap+14

Answers 1. Competitive market has 3 characteristics: It produces identical product, it is with many sellers and buyers, and there is free entry and exit.

2. firms decide to shut down in the short run if price is less than the variable cost. Firms exit the market in the long run if prices is less than the average total cost

3. C

4. Firms stay in the market because the total cost covers all expenses such as opportunity cost, wages, and inputs. Firms are satisfied with zero economic profit.