4. What assumptions are necessary for a market to be perfectly competitive? a. Firms must have market power, firms must produce a differentiated product, and firms must be able to easily enter and exit the market. b. only a few firms may produce output, firms must have market power, and firms must produce a homogenous product. C. firms must be price takers, firms must produce a homogeneous product, and firms must be able to easily enter and exit the market. d. only one firm can produce output, no close substitutes may exist, and firms must not be able to enter the market. 5. Assume that average product for six workers is fifteen. If the marginal product of the seventh worker is eighteen, marginal product is rising. marginal product is falling. c. average product is rising average product is falling. 6. The demand curve facing a perfectly competitive firm is a. the same as the market demand curve. b. downward-sloping and less flat than the market demand curve. c. downward-sloping and more flat than the market demand curve. d. perfectly horizontal. 7. When the price of cappuccino is $5, the quantity demanded is 400 per day. When the price falls to $3, the quantity demanded increases to 600. Given this information and using the midpoint method, you know that the price elasticity of demand for cappuccino is: a. - 5/4 b. - 4/5 C. - 2/5 d. - 5/2 8. Demand for a product will be more elastic a. b. the more narrowly you define the good. the more of a necessity the product is. d. All of the above are correct