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Question1. What four basic conditions characterize a competitive market?
Question2. The short-run marginal cost of the Ohio Bag Company is 2Q. Price is $100. The company operates in a competitive industry. Currently, the company is producing 40 units per period. What is the optimal short-run output? Calculate the profits that Ohio Bag is losing through suboptimal output.
Question3. Should a company ever produce an output if the mangers know it will lose money over the period? Explain.
Question4. What are economic profits? Does a firm in a competitive industry earn long-run economic profits? Explain.
Question5. The Johnson Oil Corporation has just employed the best manager in the industry. Should the owners of the company anticipate economic profits? Explain your answer.
Define robust model.
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