Choose the correct answer from the options provided:

1.Equilibrium price is $10 in a perfectly competitive market. For a perfectly competitive firm, MR = MC at 233 units of output. At 233 units, ATC is $11, and AVC is $9. The best policy for this firm is to

__________ in the short run. Also, total fixed cost equals __________ for this firm.

a.continue to produce; $2

b.shut down; $450

c.continue to produce; $466

d.shut down; $2,097

e.continue to produce; $2,097

2.In a perfectly competitive market, if a resource that one firm utilizes is superior to resources used by other firms, and, as a result, lowers unit costs for the firm, that firm is likely to earn __________ in the short run. In time, however, the firm's __________ curve will rise to reflect the superior-quality of the resource it employs and the firm will then earn __________.

a.normal profit; ATC; positive economic profit

b.positive economic profit; ATC; normal profit

c.positive economic profit; marginal revenue; zero profit

d.losses; ATC; positive economic profit

e.none of the above

3. Suppose the demand curve for a monopolistic competitor becomes steeper, but its average total costs do not change. Which of the following is likely to be an effect?

a.The firm will no longer equate MR and MC.

b.Excess capacity will increase.

c.The firm will incur a loss.

d.The firm will no longer be able to maximize profit.

4. In what industry structure is the mutual interdependence of the firms a key characteristic?

a.perfect competition

b.monopolistic competition

c.oligopoly

d.monopoly