Two firms and operate in a perfectly competitive market. Their price elasticities of supply are and respectively. Then
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2 marks, −0.667MicroeconomicsPerfect competitionShort-run supply of the firm and the industryModerateabout 2 min
IIT JAM 2023 Question 15: Perfect competition
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Two firms X and Y operate in a perfectly competitive market. Their price elasticities of supply are 0.5 and 1.5 respectively. Then (A) if the market price increases by 1%, X supplies 0.5% less quantity (B) Y experiences a slower increase in marginal cost in comparison to X (C) if market price increases by 0.5%, X supplies 1% more quantity (D) Y experiences a rapid increase in marginal cost in comparison to X
Perfect competition has come up 115 times in 7 exams since 2006.
What this question tests
This question is on Short-run supply of the firm and the industry, part of Perfect competition in Microeconomics.
The firm's supply curve above the shutdown point and how firm supplies add up to market supply.
TestStop has 8 past-paper questions on this subtopic.
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