Explain why a perfectly competitive firm is a price-taker.

All told the cost o Show more An article in BusinessWeek discussed Apples cost to produce the iPod Shuffle: All told the cost of the Shuffles components the headphones and the packaging it ships in comes to $21.77Thats about 28% of the devices retail price [of $79]. Source: Arik Hesseldahl Deconstructing Apples Tiny iPod Shuffle BusinessWeek April 13 2009. Can we conclude from this information that Apple is making a profit of about $57 per Shuffle? Explain. Question Set Answer the following questions: 1. Define marginal product of labor. 2. A certain firm has output of 20 with two workers and output of 24 with three workers. What is the marginal product of labor for the third worker? 3. Define fixed cost and variable cost. 4. Name the three market conditions that must be present for the market to be considered perfect competition. 5. Name a firm that is in a perfectly competitive market and explain why that market is considered by you to be perfectly competitive. 6. What is the rule by which a perfectly competitive firm decides how much to produce? What price does it charge? 7. Explain why a perfectly competitive firm is a price-taker. 8. Suppose a firms average fixed costs are $10 per unit variable costs are $5 per unit. What are this firms average total costs? Show less

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