The structure of a market is dertermined by certain characteristics suchas the number of buys and sellers, long-run profits, nature of demand curve, possibilityof collusion e.t.c. (a) Use the characteristics of a perfectly competitive market to explainwhy the demand curve for a firm in perfectly competitive market is perfectly elastic. (b) Mathematically prove that for an market structure, the profitmaximizing level of output is obtained at the point where the marginal cost is equal to marginal revenue i.e. _MC _= _MR_. (c) if _TC _= 3 + _Q_2 and demand is. Calculate the firm’s total profit.

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The structure of a market is determined by certain
characteristics such as the number of buys and sellers, long-run
profits, nature of demand curve, possibility of collusion etc..

(a)    Use the characteristics of a perfectly competitive market
to explain why the demand curve for a firm in perfectly competitive
market is perfectly elastic.

(b)   Mathematically prove that for an market structure, the
profit maximizing level of output is obtained at the point where the
marginal cost is equal to marginal revenue i.e. _MC _= _MR_.

(c)    if _TC _= 3 + _Q_2 and demand is.

Calculate the firm’s total profit.

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