a. What type of demand curve does a perfectly competitive firm face? Why?
b. The state of Maine has a very active lobster industry, whichharvests lobsters during the summer months. During the rest of theyear, lobsters can be obtained from other parts of the world but ata much higher price. Maine is also full of "lobstershacks," roadside restaurants serving lobster dishes that areopen only during the summer. Explain why it is optional for lobstershacks to operate only during the summer.
c. In a competitive market, how does a firm make profits if it has no control over price?