1. A firm's short run supply curve is the portion of the:

1. AVC curve that lies above the ATC curve.

2. TC curve that lies above the TR curve.

3. AFC curve that lies above the AR curve.

4. MC curve that lies above the AVC curve.

5. MR curve that lies above the MC curve.

2. Positive economic profits earned by existing firms in a perfectly competitive market will eventually lead to:

1. exit of the firms from the market.

2. a decrease in the aggregate supply.

3. the existing firms emerging as price makers.

4. entry of new firms into the market.

5. an increase in the market price of the good.

3. The model of perfect competition best applies to markets with:

1. a few firms selling differentiated products.

2. many firms selling differentiated products.

3. a few firms selling identical products.

4. significant barriers to entry and exit.

5. many firms selling identical products.

4. Which of the following is true of the demand curve faced by a monopolist?

1. A monopolist's demand curve is infinitely elastic.

2. A monopolist's demand curve coincides with its marginal revenue curve.

3. A monopolist faces a relatively inelastic demand curve.

4. A monopolist faces a positively sloped demand curve.

5. A monopolist's demand curve is more elastic than a competitive firm's demand curve.

5. Why does an efficiency loss arise under monopoly rather than under perfect competition?

1. A monopolist sells a lesser quantity at a higher price.

2. A monopolist sells a greater quantity than a perfect competitor.

3. There is an increase in producer surplus, consumer surplus remaining unchanged.

4. There is a net increase in consumer surplus but a net decline in producer surplus.

5. A monopolist charges a lower price for the product to gain market entry.

6. When practicing price discrimination, a firm can increase its revenue by:

1. charging a higher price to the customers with a more inelastic demand.

2. supplying less in a market with lower elasticity of demand.

3. supplying more in a market with a more inelastic demand.

4. charging a lower price in a market dominated by wealthy consumers.

5. charging a higher price to the customers with a perfectly elastic demand.

7. Movie theaters are able to offer discounts to senior citizens because:

1. theaters can separate senior citizens from other customers, and it is easier to prevent resale.

2. the elderly deserve lower prices because of their contributions to society.

3. senior citizens are frequent visitors to the movie theaters.

4. senior citizens have the most inelastic demand.

5. senior citizens cannot see the movie very well because of poor eyesight.