1. Fixed costs in the short run increase. The change will eventually result in ______________ (compared to the initial price) in the long-run market price in a competitive, constant cost industry.

a. an increase

b. a decrease

c. no change

2. A profit-maximizing perfectly competitive industry will be ______________ in the short run.

a. technically and allocatively efficient

b. allocatively efficient alone

c. technically efficient alone

d. neither technically or allocatively efficient

3. Think about the characteristics of firms and the products in a perfectly competitive model. Which of the markets is most likely to be considered perfectly competitive?

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a. commercial airline travel

b. automobile production

c. higher education

d. agricultural commodities such as corn or wheat