5.

(04.02 MC) A firm is the only supplier of sprockets. The allocatively efficient output of sprockets is 40 million units. Consumers would pay $6 per sprocket at that price level. The firm is producing 30 million sprockets. Which of the following statements must be true? (2 points)

	The firm is producing too much output.
	The firm is charging more than the competitive price.
	The firm is operating in a monopolistically competitive market.
	The firm's marginal revenue is higher than its market demand.
	The firm's average total cost is equal to price at its current output level.

7.

(04.03 HC) A monopolist begins to engage in perfect price discrimination where previously it charged a single price for all its customers. Its profit would ________, quantity produced would ________, and deadweight loss would ________. (2 points)

	Increase; stay constant; disappear
	Increase; increase; disappear
	Increase; increase; increase
	Decrease; decrease; increase
	Decrease; decrease; decrease

8.

Use the graph to answer the question that follows. Q, 0; Quantity The graph represents a rm in monopolistic competition. Which of the following statements about the firm's price is accurate? 0 The price is set at the intersection of MR and MC. 0 The price is set at the intersection of MC and D. O The price is set at the intersection of ATC and MC. 0 The price is set at the intersection of ATC and D. O The price is set on the ATC above the intersection of MC and D