1. In the long run the effect of economic profits is to:

Increase market supply and increase market price.

Decrease market supply and increase the market price

Decrease market supply and decrease market price.

Increase market supply and decrease market price.

2. To maximize profits, a competitive firm will seek to expand output until:

Price equals marginal cost.

The elasticity of demand equals 1.

Total revenue equals total cost.

Price equals $0.

3.A firm should shut down production when:

P < minimum AVC.

P > minimum AVC.

P = MC.

P = minimum ATC.

4. If a firm can at least cover variable costs but not the total cost they will:

Keep producing in the short run, hoping for things to improve.

None of the above.

Shut down because they are experiencing losses.

Expand production because they are experiencing profits.

5. Technological improvements cause:

Marginal Cost to shift to the right.

The supply curve shifts to the right.

ATC to shift down.

All of the above.