1.

In pure competition:

a. the optimal price-output solution occurs at the point where marginal revenue is equal to price

b. a firm is a price-taker since the products of every producer are perfect substitutes for the products of every other producer

c. a firm's demand curve is represented by a horizontal line

d. All of the choices are correct.

2.

A firm's demand curve is represented by a horizontal line

a. price is less than marginal cost

b. a firm's demand curve is represented by a horizontal line

c. price is less than average fixed cost

d. price is less than average total cost

3.

In a competitive market, the market price is $10 per unit. A firm has the following total cost function: TC = Q^2 + 4Q + 2.

What is the optimal level of output that maximizes profit?

a. 3

b. 4

c. 5

d. 2

4.

If price exceeds average costs under pure competition, ____ firms will enter the industry, supply will ____, and price will be driven ____.

a. more; decrease; up

b. more; decrease; down

c. more; increase; up

d. more; increase; down

5.

In a competitive market, the market price is $20 per unit. A firm has the following total cost function: TC = Q^2 + 4Q + 2.

What is the optimal level of output that maximizes profit?

a. 4

b. 10

c. 6

d. 8

6.

In a competitive market, the market price is $20 per unit. A firm has the following total cost function: TC = Q^2 + 4Q + 2.

The firm's marginal revenue is ______

a. cannot be determined

b. $8

c. $20

d. $10

7.

Unique Creations has a monopoly position in magnometers. If the marginal cost for a magnometer is $50 and the price elasticity for magnometers is -2.0, what is the optimal monopoly price?

a. 75

b. 50

c. 125

d. 100