I. TRUE OR FALSE. Read the following statements and identify whether it is correct or incorrect. Write A if both statements are correct; B if both statements are incorrect; C if first statement is correct, second statement is incorrect; and D if first statement is incorrect and second statement is correct. (30 points) 1. 1st statement: If profit maximizing firms in a perfectly competitive industry are producing 14,000 units per day, but can only sell 12,000 units per day at the current market price of $23, then the market equilibrium price must be greater than $23. 2nd statement: If profit maximizing firms in a perfectly competitive industry will produce 14,000 units per day if the market price is $23 and consumers will purchase 14,000 units per day if the market price is $20, then the market equilibrium quantity must be greater than 14,000. 2. 1 st statement: Product price on a competitive market is determined by the intersection of the market demand curve with the market supply curve. 2nd statement: If a firm in a perfectly competitive industry charges a higher price than that charged by other firms in the industry it will be unable to sell any of its output. 3. 1st statement: Monopsony is a market structure in which there is a single buyer of a commodity or input for which there are no close substitutes. 2nd statement: Monopoly is a market structure in which there is only one buyer of a product for which there are no close substitutes. 4. 1 st statement: Market structure refers to the competitive environment in which the buyers and sellers of a product operate. 2nd statement: Economists define a market as a place where buyers go to purchase units of a commodity. 5. 1st statement: If the firms in an industry are price takers, then every firm in the industry faces a horizontal demand curve. 2nd statement: If a market is perfectly competitive, then the market demand curve must be infinitely price elastic. 6. 1st statement: The combination of product homogeneity and perfect knowledge ensure that a single price will prevail on a perfectly competitive market. 2nd statement: Product price on a competitive market is determined by the intersection of the market demand curve with the market supply curve. 7. 1 st statement: The demand curve faced by a perfectly competitive firm is horizontal. 2nd statement: A perfectly competitive firm's demand curve is above its marginal revenue curve. 8. 1 st statement: The shut-down point of a perfectly competitive firm is at the minimum point on its short-run average variable cost curve. 2nd statement: The supply curve of a perfectly competitive firm is identical to the portion of its marginal cost curve that is above its average total cost curve. 9. 1 st statement: Monopolistic competition is most common in the manufacturing sector. 2nd statement: The short-run supply curve for a monopolistically competitive firm is identical to the upward-sloping portion of the firm's marginal cost curve above average variable cost. 10. 1st statement: Monopolistically competitive firms are price takers. 2nd statement: Monopolistically competitive firms face a downward-sloping demand curve