Q1) Relative to firms in a perfectly competitive market, firms engaged in monopolistic competition are characterized by

1 Lower levels of deadweight loss

2 Long-run inefficiencies due to excess capacity

3 Higher economic profits in the long run

4 None of the above

Q2) When a museum charges $10 per ticket to enter, it sells 600 tickets. When the museum reduces the cost to $8 per ticket, it sells 1,000 tickets. Over this price range, the demand for museum tickets is

1 Unit elastic

2 Elastic (but not perfectly elastic)

3 Inelastic (but not perfectly inelastic)

4 Perfectly elastic

5 Perfectly inelastic