question number 5 from chapter 6: Define returns to scale. Why is this considered a long-run phenomenon?
question number 4 from chapter 7: “If it were not for the law of diminishing returns, a firm’s average cost and average variable cost would not increase in the short run.” Do you agree with this statement? Explain.
question number 2 from chapter 8: Explain the importance of free entry and exit in the perfectly competitive market. That is, if free entry and exit did not exist, what impact would this have on the allocation of resources and on the ability of firms to earn above-normal profits over time?
question number 6 from chapter 8: Use the model of perfect competition described in this chapter to explain, illustrate, or elaborate on the following statements.
“Increasing competition from new firms entering the market is good because it means one is in a good business.”
“One important difference between an entrepreneur and a manager is that the former gets into a market before demand increases, while the latter gets into the market after the shift.”