1) A perfectly competitive firm's short-run supply curve is its:

A. average variable cost curve above the marginal cost curve.

B. marginal cost curve above the average fixed cost curve.

C. marginal cost curve above the average total cost curve.

D. marginal cost curve above the average variable cost curve.

2)Economic Profit

A. (per unit) is price minus average variable cost.

B. is correctly described by all of these.

C. as a total amount, is (P - ATC) times quantity.

D. is the difference between total revenue and total fixed costs.

3)Economic profit is maximized when:

A. an additional unit of output yields a benefit to the firm greater than the additional cost.

B. the slope of the total revenue curve is equal to the slope of the total cost curve.

C. no more output can be sold at the market price.

D. marginal revenue is more than marginal cost. marginal revenue is more than marginal cost.

4)Suppose that some firms in a perfectly competitive industry are earning positive economic profits. At this time, the:

A. number of firms in the industry will decrease.

B. number of firms in the industry will change in the short run.

C. industry is not in long-run equilibrium.

D. industry supply curve is shifting to the left.

5)Suppose that some firms in a perfectly competitive industry are incurring negative economic profits. The:

A. number of firms in the industry will not change in the long run.

B. industry is not in long-run equilibrium.

C. industry supply curve will not shift in the long run.

D. industry supply curve will shift to the right in the long run.