1. What are firms assumed to maximize? Under what constraints do firms perform this maximization? Describe how the individual firm determines the output level that achieves that maximum. Can you characterize the firm’s constrained maximum as one for which marginal cost equals marginal benefit?
2. Characterize these different market structures in which a firm may operate: perfect competition, monopoly, oligopoly, and imperfect competition. Compare the industry output and price in a perfectly competitive industry with the output and price of a monopolist.