Answer each of the questions below in short-answer format. Write your responses in complete sentences. Your answers to each question should include 2-3 paragraphs. Be sure to carefully read each question to ensure that each component is answered with the appropriate depth and detail. Assignment questions are cumulative, meaning they will have questions from the current and previous lessons. Your answers should be free of spelling and grammar errors.
When you use reference material, you must properly cite your sources with in-text citations. You must also include a reference list. All documentation must be rendered in APA citation style. (See announcements for details on APA.) The Rio Salado Online Library is the best source for authoritative, validated information on your research topics. Review the Short-Answer Grading Rubric as you prepare to complete this assignment.
1. What is a price taker? Discuss the assumptions that are made in order to obtain the perfectly competitive model.
2. Define the short-run break-even price. What are economic profits at this price? Why would a firm be willing to operate permanently at this price?
3. An upscale bistro in a small town charges higher prices for the same menu items at dinner time than at lunch time. Does the bistro necessarily practice price discrimination? Explain your answer.
4. What is the social cost of a monopoly? Explain.
5. Explain why the amount that firms spend on advertising depends upon the characteristics of their products.