1.In the short run, perfectly competitive firms can incur economic losses but in the long run, firms make positive economic profit.* True False 2. In perfect competition, the firm's marginal revenue equals the market price* True False 3. The type of industry where there are a few firms and each of these firms thinks about, anticipates, and reacts to the other firm's moves is called oligopoly* True False 4. Because they can control product price, monopolists can guarantee profitable production by simply charging the highest price consumers will pay. True False 5. If an industry lacks barriers to entry and each firm faces a downward-sloping demand curve, the industry is a monopoly* True False 6. Based on the table below, what can you conclude about the structure of the industry in which this firm is operating?' Product Price Quantity Demanded Total Revenue Marginal Revenue $2 0 $ 0 IN S W N - 4 S NNNNN 6 S 8 S UI A S 10 $ a) The industry is monopolistically competitive. b) The industry is purely monopolistic.C) The industry is purely oligopolistic. d) The industry is purely competitive. 7. The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a purely competitive firm that produces novelty ear buds. Assume the market for novelty ear buds is a competitive market and that the price of ear buds is $6.00 per pair. If Buddies wants to maximize profits, how many pairs of ear buds should it produce each week?" Buddies Production Costs Quantity of Ear Buds MC ($) ATC ($) 5 8.00 10 2.00 5.00 15 2.45 4.15 20 3.55 4.00 25 4.00 4.00 30 5.50 4.25 35 6.00 4.50 40 8.50 5.00 a) 15 b) 25 C) 30 d) 35 8. At the profit-maximizing quantity, what is the total cost of producing ear buds?* Buddies Production Costs Quantity of Ear Buds MC ($) ATC ($) 5 8.00 10 2.00 5.00 15 2.45 4.15 20 3.55 4.00 25 4.00 4.00 30 5.50 4.25 35 6.00 4.50 40 8.50 5.00 a) 62.25 b) 100 C) 127.50 d) 157.509. If the market price for ear buds is $6 per pair, and Buddies produces the profit- rnaximlzing quantity oi ear buds. what will Buddies prot or loss be per week?' -_ \"mm \"_m \"m\" \"In.\" -__m 3 / 7 \"m \"m a} 56 b) as c) 52.5 d] 31.25 10. Now assume lhe market price is $5.50 per pair. and Buddies produces the prot-maximizing quantity of ear buds. What Buddies profit or loss be per week?\" a) 65 b) 37.50 c) 52.5 d] 31.25 11. Buddies earns a normal prot when' a) average cost equals average revenue at the minimum of average cost. b) marginal cost equals average cost at the minimum of average cost. C) marginal cost equals average cost. d) marginal cost equals marginal revenue at the minimum of marginal cost. 12. Based on the diagram below determine the profit maximizing price and quantity for the firm* Cost and Revenue (RM) MC ATC 22 20 15 14 10 4/7 AR Quantity 25 30 (units) a) P:20, Q:30 b) P:15, Q:30 C) P:20, Q:25 d) P:10, Q:25 13. Calculate the value of Total Cost at the equilibrium output* Cost and Revenue (RM) MC ATC 22 20 15 14 10 AR MR Quantity 25 30 (units) 375 ) 600 55014. Calculate the total variable cost at equilibrium if average fixed cost is RM2.00* Cost and Revenue (RM) MC ATC 22 20 15 14 10 AR MR Quantity 25 30 (units) a) 450 b) 500 C) 490 550 15. Calculate the total profit/loss the firm is making at equilibrium* Cost and Revenue (RM) MC ATC 22 20 15 14 10 AR MR Quantity 25 30 (units) -50 50 150 -25016. Suppose a monopolist's profit-maximizing output is 200 units per week and that the firm sells its output at a price of $60 per unit. The firm has total costs of $9,000 per week. Assume the monopolist is maximizing its profit and earns $30 per unit from the sale of the last unit produced each week. What are the firm's weekly profits?* a) 12000 b) 6000 C) 3000 d) 600 17. Consider the diagram below depicting the revenue and cost conditions faced by a monopolistically competitive firm. According to the diagram, the profit-maximizing price and output level is* $70 $65 MC $60 $55 $50 $45 540 ATC d costs $40 $35 $32.50 $30 $25 $25 '520' $20 $15 Demand $10 $5 0 50 '505050 5 05 8 0'50 Quantity a) P: 32.5, Q:4.5 units. b) P: 15, Q: 2.5 units C) P: 40, Q: 2.5 units d) P: 25, Q: 4.0 units18. Consider the diagram below depicting the revenue and cost conditions faced by a monopolistically competitive firm. What is the total revenue for this firm?" $70 $65 $60 $55 $50 $45 $40 ATC $40 $32.50 Price and costs $35 $30 $25 $25 $20 $15 Demand $10 $5 0 Quantity a) 146.26 b) 100 C) 87.5 d) 37.5