6. In perfect competition, the profit or loss is determined through:*

a. (P-ATC)*Q.

b. (P-AVC)*Q.

c. (P-Q)*ATC.

d. (ATC-Q)*P.

7. For a perfectly competitive firm, if total revenue is less than total cost but greater than total variable cost, that means:*

a. Price is below average variable cost only.

b. Price is above average total cost only.

c. Price is between average total cost and average variable cost.

d. Price is below both average total cost and average variable cost.

8. The law of diminishing returns only applies in cases where:*

a. There is increasing scarcity of factors of production.

b. The price of extra units of a factor is increasing.

c. There is at least one fixed factor of production.

d. The capital is a variable input.

9. If a firm sells its output on a market that is characterized by a single seller and many buyers of a homogeneous product for which there are no close substitutes and barriers to long-run resource mobility, then the firm is:*

a. A monopolist.

b. An oligopolistic.

c. A perfect competitor.

d. A monopolistic competitor.