QUESTION 15 For a monopoly firm, if AVC = $20, P = $21, and ATC = $22, then the firm should: increase production. O produce at the point where MC = MR. reduce production. shut down. QUESTION 16 Which of the following is MOST likely to be a natural monopoly? O an ambulance service in a small town in Wyoming Apple, Inc. an automobile manufacturer with a national market United Parcel Service QUESTION 17 Assume that economic profits are earned by firms in monopolistic competition. What happens in the long run? O New firms enter, the market demand rises, and the price for each firm falls until normal profits occur. New firms enter, the market supply rises, and the price for each firm falls until P = MC for each firm. New firms enter, and demand for each firm's product rises until economic profits are eliminated. O New firms enter. and demand for each firm's product falls until economic profits are zero.QUESTION 18 Cartels are inherently unstable because: any one rm can make additional profits by selling additional output at a price below marginal cost. of the disincentive to cheat. rms behave like competitive rms facing a market price. any one rm can make additional profits by selling additional output at a price above marginal cost. QUESTION 19 Each oligopolistic rm recognizes that it must take into account the behavior of its competitors when it makes pricing decisions. This recognition is called: monopolistic behavior. prot-maximization behavior. " mutual interdependence. mutual dependence