Question 8 A separate set of data results in the following graphs of TVC, AVC, Answer saved and MC: Marked out of 400000 1.00 350000 Flag question 300000 250000 200000 -TVC 150000 100000 50000 2000 4000 6000 8000 180 160 140 120 100 AVC 80 MC 60 40 20 0 2000 4000 6000 8000 The best functional forms to estimate would be to use a function for TVC, a function for AVC, and a function for MC. Select one: O a. quadratic (TVC); cubic (AVC); cubic (MC) O b. cubic (TVC); quadratic (AVC); cubic (MC) O c. cubic (TV C); quadratic (AVC); quadratic (MC) O d. cubic (TVC); cubic (AVC); quadratic (MC)Question 9 Which of the following is true of perfectly competitive markets? Not yet answered Select one: Marked out of 1.00 O a. If a firm sells a product that is superior in quality or efficiency, it can command a higher price than its competitors. Flag question O b. Firm demand is perfectly inelastic, or vertical, at the market equilibrium price. O c. The revenue created by the sale of one more unit of the product is equal to the market price. O d. Substantial barriers exist for firms that wish to either enter a market, or exit from the industry.Information Flag question Use the graph below to answer the following four questions: SMC 5 ATC Price and cost (dollars) AVC 3 2 100 200 300 400 500 600 700 80D (A graph with quantity on the horizontal axis and price and cost in dollars on the vertical axis, showing marginal cost (MC), average total cost (AT'C), and average variable cost (AVC). MC increases at an increasing rate as quantity increases. AC is U-shaped and starts at about (200 units, $5), decreases to its minimum at (500 units, $3.90), then increases to a right-most point at about (750 units, $5). AVC is U- shaped and starts at about (100 units, $3), decreases to its minimum at (300 units, $2.40), then increases to a right-most point at about (750 units, $4). MC intersects AVC and ATC at their minimum points: at about (300 units, $2.40) for AVC and at about (500 units, $3.90) for ATC.Question 10 If market price is $4.50, the firm should produce about units of Not yet output; if it does so, the firm will answered Marked out of Select one: 1.00 O a. 575; earn positive economic profit. F Flag question O b. 500; earn a short-run loss. O c. 300, take a loss that requires the firm to shut down in the short run. O d. 700; break even Question 11 If the market price is set at $2, a firm in this market would Not yet answered Select one: Marked out of 1.00 O a. continue operating and produce about 250 units, which results in a short-run loss that will eventually reverse itself. Flag question O b. take a loss that exceeds variable cost, causing the firm to want to shut down in the short run. O c. produce about 250 units and earn profit since total cost exceeds marginal cost at that output. O d. increase its output to 400 units to recover lost revenue.Question 12 If the short-run market price is $5, in the long run the price would be Not yet expected to answered Marked out of Select one: 1.00 O a. fall because the short-run profit encourages entry of competing Flag question suppliers, which pushes the market equilibrium price down. O b. fall because the temporary profits will decrease the market supply, since the profit of existing firms will be concentrated only among a few sellers. O c. rise because the short-run losses will cause some firms to exit the industry. O d. rise because the temporarily high price will discourage consumers in the long-run, reducing supply. Question 13 What is the shutdown price, and what is the lowest level of output this Not yet firm would produce in the short run? answered Marked out of Select one: 1.00 O a. $2.50 and 300 units of output. Flag question O b. $3.80 and 500 units of output. O c. $4.50 and 300 units
