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Answer the Following Questions About a Market That Is Perfectly

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Essay

Answer the following questions about a market that is perfectly competitive:
a.If the price is above the equilibrium price,would there be a shortage or a surplus?
b.What will happen if the price is below the equilibrium price?
c.During a shortage,how does the market respond until it once again reaches equilibrium?


Definitions:

Profit-Maximizing

The process or strategy employed by a firm to adjust its production and prices to achieve the highest possible profit.

Price Elasticity

A quantitative representation of how quantity demanded or supplied of a product changes in response to a price change, signifying the sensitivity of consumers or producers to price variations.

Marginal Cost

The incremental cost of creating one more unit of a good or service.

Profit-Maximizing

Profit-maximizing refers to the strategy or point where a company achieves the highest possible profit from its operations, after accounting for all costs.

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