Critical Thinking Assignment (150 Points) Short Answer Questions on Elasticity, Costs, and Profits Please answer the following short-answer questions: • What are the characteristics of price-taker markets? What do each of these characteristics mean for a market? • What is the decision rule for firms to maximize profits? • What happens to total revenue for a good with an elastic demand if the price increases? Why? • What do economists consider for profit that accountants don’t? Give two examples that would fit in this difference. • Graph the MC, ATC, AVC, and AFC curves (a sketch is fine, specific numbers are not needed). • What happens in a perfectly competitive market if the market price is below firms’ minimum average total cost? Describe that shift from the short run to the long run. Your paper should be 2 pages in length and conform to APA guidelines Required reading microeconomics: principles and policy By Gwartney/Stroup/Sobel. McPherson.ISBN 978035734016, 9798214349091
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