7.A firm develops and markets consumerproducts in a perfectly competitive, decreasing-costindustry. The firm's products have grown in popularity. The most likely equilibriumresponse in the long run to rising demand for such products is for selling prices to:

A. fall and per-unit production costs to decrease.

B. rise and per-unit production costs to decrease.

C. remain constant and per-unit production costs to remain constant.

D. prefer not to decide.

8.TetaNatural Gas, Inc. is a monopoly enjoying very high barriers to entry. Its marginal cost is30 and its average cost is50. A recent market study has determined that the price elasticity of demand is 1.3. The company will most likely set its price at:

A.30.

B.50.

C.130.

D. prefer not to decide.

9.If companies earn economic profits in a perfectly competitive market, over the long run thesupply curve will most likely:

A. shift to the left.

B. shift to the right.

C. remain unchanged.

D. prefer not to decide.

10. A government entity that regulates an authorized monopoly will most likely base regulated prices on:

A. marginal cost.

B. long-run average cost.

C. first-degree price discrimination.

D. prefer not to decide.