Problem
According to the definition, a perfectly competitive firm cannot affect the market price by any changing only its own output. Producer No. 27 in problem 2 decides to experiment by producing only 8 units.
a. What happens to the market price?
b. Calculate the elasticity of demand facing Producer No. 27 for its own output.
c. What happens to Producer No. 27's revenue as a result of cutting output?
d. Experiment to find the approximate number of firms that must agree to cut their output by 2 units apiece before it becomes profitable for them to do so as a group. Might the reduction in output fail to raise profits even if all firms in the market agree to make such a cut? Explain.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.