A.

Suppose firms in a competitive market are suffering from economic losses. Which of the following statements best describes what will occur in the long-run?

		Some firms exit the market, so the price falls and the economic loss decreases.
		Some firms enter the market, so the price falls and the economic loss decreases.
		Some firms exit the market, so the price rises and the economic loss decreases.
		Some firms enter the market, so the price rises and the economic loss decreases.

B.Which of the following statements about price ceilings is TRUE? (Assume the price ceiling is set below the equilibrium price)

	A.	Price ceilings make sellers worse off.
	B.	Price ceilings make buyers better off.
	C.	Both A and B are true.
	D.	Neither A nor B is true.

C.Which of the following types of market structures has a large number of firms that sell similar, but slightly differentiated products?

		Monopolistic competition.
		Perfect competition.
		Oligopoly.
		Monopoly.

D.If a monopolistically competitive firm uses advertising to convince buyers that its product is more differentiated (i.e. better quality or value) than those sold by its competitors, which of the following occurs?

		The demand for its product increases.
		The firm gains more market power to control its price.
		The demand for its product becomes less elastic.
		All of the above.

E.If the price of its good falls below the minimum point on the AVC curve, the best a perfectly competitive firm can do is to:

		Shutdown and incur a loss equal to its total fixed cost
		Keep producing and incur a loss equal to its total variable cost
		Keep producing and incur a loss equal to its total variable cost
		Shutdown and incur a loss equal to its total variable cost