long run, and at least one firm will be struggling.

Chapter 8

1. No, you would not raise the price. Your product is exactly the same as the product of the many other firms

in the market. If your price is greater than that of your competitors, then your customers would switch to

them and stop buying from you. You would lose all your sales.

2. Possibly. Independent truckers are by definition small and numerous. All that is required to get into the

business is a truck (not an inexpensive asset, though) and a commercial driver’s license. To exit, one need

only sell the truck. All trucks are essentially the same, providing transportation from point A to point B.

(We’re assuming we not talking about specialized trucks.) Independent truckers must take the going rate

for their service, so independent trucking does seem to have most of the characteristics of perfect

competition.

3. Holding total cost constant, profits at every output level would increase.
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