Multiple Choice Questions
Use the accompanying diagram to answer questions 1€“2.

1. Which of the demand curves represents a long-run equilibrium for the firm?
a. D0
b. D1
c. D2
d. D3
2. Which of the demand curves will result in the firm shutting down in the short run?
a. D0
b. D1
c. D2
d. D3
3. In the long run, firms in monopolistic competition do not attain productive efficiency because they produce
a. At a point where economic profits are positive.
b. At a point where marginal revenue is less than marginal cost.
c. At a point to the left of the low point of their long-run average total cost curve.
d. Where marginal cost is equal to long-run average total cost.
4. In the long run, firms in monopolistic competition do not attain allocative efficiency because they
a. Operate where price equals marginal cost.
b. Do not operate where price equals marginal cost.
c. Produce more output than society wants.
d. Charge prices that are less than production costs.
5. Compared to perfect competition, firms in monopolist competition in the long run produce
a. Less output at a lower cost.
b. Less output at a higher cost.
c. More output at a lower cost.
d. More output at a higher cost.
6. If Rolf wants to use advertising to reduce the elasticity of demand for his chiropractic services, he must make sure the advertising
a. Clearly states the prices he charges.
b. Shows that he is producing a product like that of the other chiropractors in town.
c. Shows why his services are truly different from the other chiropractors in town.
d. Explains the hours and days that he is open for business.
7. Advertising about prices by firms in an industry will make an industry more competitive because it
a. Reduces the cost of finding a substitute when one producer raises his price.
b. Assures the consumers that prices are the same everywhere.
c. Increases the cost for all firms because of the existence of economies of scale.
d. Reduces the number of firms because of the existence of economies ofscale.

Transcribed Image Text:

ATC AVC 0L Quantity