28. Assume a firm is producing 500 units of output and that it sells each unit for $6. Its average total cost is $4. What is its profit? a. -$2000 b. -$1000 C. $1000 d. $2000 29. What is one consideration that applies to the analysis of a market over the long run but not to the analysis over the short run? a. changes in the price of the product b. changes in firms' profits C. changes in the numbers of firms in the market d. changes in firms' cost structures 30. In the long run, what happens to inputs? a. Inputs that were fixed in the short run remain fixed. b. Inputs that were fixed in the short run become variable. C. Inputs that were variable in the short run will increase. d. Inputs that were variable in the short run will decrease. 31. When a profit-maximizing firm in a competitive market is unable to generate enough revenue to pay all of its fixed costs, what should it do in the short run? a. It should shut down and incur a loss equal to its fixed costs. b. It should shut down until it is able to produce where average revenue exceeds average fixed cost. C. It should continue to produce as long as marginal cost is less than average revenue. d. It should continue to produce as long as total revenue is sufficient to pay variable costs. 32. Which statement does NOT reflect a price-taking firm? a. If the firm were to charge more than the going price, it would sell none of its goods. b . The firm has no incentive to charge less than the going price. C. The firm can sell as much as it wants to sell at the going price. d. Consumers have a major impact on price, not firms.33. When new rms have an incentive to enter a competitive market, which effect will their entry have? a. It will increase the price of the product. b. It will drive down prots of existing rms in the market. c. It will shift the market supply curve to the left. d. It will increase existing rms' average costs. 34. What distinguishes short-run cost analysis 'om long-run cost analysis for a prot-maximizing rm? a. In the short run output is not variable. b. In the short run the number of workers used to produce the rm's product is xed. 0. In the short run the size of the factory is xed. d. In the short run there are no xed costs. 35. Why are long-run average-total-cost curves often U-shaped? a. for the same reasons that short-run average-total-cost curves have the identical U-shape b. because of constant returns to scale 0. because of increasing coordination problems at low levels of production and increasing specialization of workers at high levels of production (1. because of increasing specialization of workers at low levels of production and increasing coordination problems at high levels of production 36. A competitive market is in long-run equilibrium. If demand decreases, what can we be certain will happen to price? a. Price will fall 1n the short run. All firms will shut down and some of them will exit the industry. Price will then rise. b. Price will fall in the short run. No rms will shut down, but some of them will exit the industry. Price will then rise. c. Price will fall in the short run. All, some, or no rms will shut down, and some of them will exit the industry. Price will then rise. d. Price will not fall in the short run because rms will exit to maintain the price. 37. How can we dene consumer surplus in a market? a. It is the area below the demand curve and above the price. b. It is the distance from the demand curve to the horizontal axis. c. It is the distance from the demand curve to the vertical axis. d. It is the area below the demand curve and above the horizontal axis. 38. Refer to Figure 8-5. Which area represents producer surplus after the tax is levied on the consumer? a. A b. A+B+C c. D+E d. F 39. 102030405000708090100 '1'\"? Refer to Figure 6-2. At which price would there be a binding price ceiling? a. $8.00 b. $10.00 c. $12.00 d. $14.00 40. Refer to Figure 7-5. What area represents producer surplus when the price is Pl ? a. A b. B c. C d. D 's_m ........................ . ... .. . . . . .. ... . . 4.00 . . . . . . . . : 55' 25 aswrsm 41. Refer to Figure 6-7. At which price would a binding price oor exist? a. $2.00 b. $4.00 c. $5.00 d. any price above $6.00 42. When a tax is levied on the sellers of a good, what happens to the supply curve? a. shifts left (up) by more than the tax b. shifts right (down) by more than the tax c. shifts left (up) by an amount equal to the tax (1. shifts right (down) by an amount equal to the tax