11. Which of the following features is common to both perfectly competitive markets and monopolistically competitive markets?

Select one:

a. There is free entry and long run profits are zero.

b. There is free entry.

c. Long run profits are zero.

d. Firms produce homogeneous goods.

12. For a monopolist to sell more units of output:

Select one:

a. The other competing firms must sell fewer units. b. Demand must become more elastic.

c. It must decrease the price.

d. It must increase the price.

13. XYZ Computer Company has a monopoly on the sale of a specialized color printer. If it sells two of these printers, its total revenue is 1,000 and if it sells three, its total revenue is 1,300. The marginal revenue of the third colour printer sold is

Select one:

a. 1,300. b. 150. c. 300. d. 100.

14. The Specialty Cake Store, a monopolistically competitive firm, is producing 200 decorated cakes per day and selling each cake at a price of 12. At that production level ATC is 20, AVC is 15, AFC is 5, and both MR and MC are 8. This firm should:

Select one:

a. Continue to produce 200 cakes, as price is greater than AFC .

b. Produce zero cakes and pay fixed costs.

c. Increase output to the point where price equals marginal cost.

d. Decrease output to the point where marginal cost equals average cost.

15. A monopolist is currently producing output that maximizes its profits. In addition, if P > ATC > MC, then it is:

Select one:

a. Earning positive economic profits.

b. Covering total variable costs but not total fixed costs. c. Breaking even.

d. Covering total fixed costs but not total variable costs.