4. If barriers to entry exist in the market for a product, then:

a. the existing firms will quit the market in the long run due to mounting losses.

b. there will be few close substitutes of the product in the market.

c. firms will be incurring losses in both the short run and the long run.

d. firms will tend to have relatively less monopoly power.

e. the costs of entry and exit are relatively low.

10. A positive economic profit signals that the investors of a firm should divert their funds to alternative ventures.

True/ False

11. Assume that a firm's marginal revenue curve intersects the rising portion of the marginal cost curve at 100 units of output. At this output level, the profit-maximizing firm's total fixed cost is $600 and its total variable cost is $400. If the price of the product is $8 per unit, the firm should produce:

a.100 units of output.

b.200 units of the output.

c.zero units of output.

d.less than 100 units of output.

e.more than 100 units of output.

13. A perfectly competitive firm spends a significant part of its revenue on advertisements, and tries to sell more by reducing its price below the market price. true or false

14. The table given below reports the marginal revenue and marginal cost of Holmes Detective Agency for each client. Table 9.2

Holmes's Detective Agency
Number of Clients	Marginal Revenue	Marginal Cost
1	100	$200
2	90	$100
3	80	$80
4	70	$40
5	60	$45
6	50	$50
7	40	$60
8	30	$70
9	20	$90
10	10	$120

According to Table 9.2, what will be the total number of clients that will maximize profits for the Holmes Detective Agency?

a. 3

b. 5

c. 8

d. 2

e. 6

18. What causes the market supply curve to shift rightward?

a.Decrease in the number of existing firms

b.Entry of new firms

c.Decrease in the price level

d.Increase in the aggregate demand

e..Increase in the cost of production