14. In the short-run, a firm in perfect competition maximizes profit at an output where _____.

• a. price is the maximum possible
• b. price is below other firms' prices
• c. price = marginal cost
• d. price = average cost

15. In perfect competition, a firm's marginal revenue (MR) is equal to the equilibrium market price.

• a. True
• b. False

16. In perfect competition, the firm maximizes profit at the output level where MR = MC.

• a. True
• b. False

17. In the short-run in perfect competition, when a firm produces where MR > MC, the firm _____.

• a. should decrease output
• b. is maximizing its profit
• c. is minimizing its profit
• d. should increase output

18. For a perfectly competitive firm, if MR of an extra unit of output exceeds MC of an extra unit, the firm should lower its output.

• a. True
• b. False

19. If demand for a product made in a perfectly competitive industry increases, the model predicts that, in the short run, price and output will decrease.

• a. True
• b. False

20. If demand for a product made in a perfectly competitive industry increases, the model predicts that SR (short-run) adjustments will follow which sequence?

• a. Price down; output up in SR
• b. Price up; output up in SR
• c. Price up; output down in SR
• d. Price down; output down in SR