Remember that for a profit-maximizing firm, marginal benefits are measured by marginal revenue. Suppose a perfectly competitive firm's marginal revenue is $10 while its marginal cost is $11. Under these circumstances the firm:

Question 1 options:

	needs to know the market price before it can determine whether it is maximizing profit.
	is not maximizing profit and should increase output.
	is not maximizing profit and should reduce output.
	is maximizing profit and should not change output.

Question 2 (2 points)

Restaurants offer early bird discounts for customers ordering before 6 p.m. If the reason for the discount is price discrimination, then we can conclude that:

Question 2 options:

	people who can eat before 6 p.m. have a less elastic demand for restaurant meals than the general public.
	there is no difference in elasticity of demand between the people who can eat before 6 p.m. and those that cannot.
	elasticity of demand has nothing to do with price discrimination.
	people who can eat before 6 p.m. have a more elastic demand for restaurant meals than the general public.

Question 3 (2 points)

Comparing an oligopolist and monopolist:

Question 3 options:

	the oligopolist can keep their profits into the long run but the monopolist cannot.
	Both the oligopolist and monopolist can keep their profits into the long run.
	the oligopolist cannot keep their profits into the long run but the monopolist can.
	Both the oligopolist and monopolist cannot keep their profits into the long run.

Question 4 (2 points)

In Plant City, Florida there are many small family-owned strawberry farms. Most farms are generally small and the strawberries produced by each farm are close to identical. Each farm is too small to affect the market price of strawberries; so whatever the market price is, that is what they have to sell their strawberries for. This market situation characterized by many sellers each offering an identical product, and therefore having no control over the market price, is known as:

Question 4 options:

	pure monopoly.
	monopolistic competition.
	an oligopoly .
	perfect competition.

Question 5 (2 points)

Monopolies can exist due to:

Question 5 options:

	ownership of a natural resource.
	the existence of a patent.
	all of the above.
	lower average total costs for one firm as compared to multiple firms.

Question 6 (10 points)

Match each term to the correct definition.

Question 6 options:

12345	Monopolistic competition
12345	Marginal revenue
12345	Perfect competition
12345	Long run
12345	Short run

1.	The change in total revenue due to output increasing by one unit.
2.	A market structure each firm is a small part of the total industry but where there are many firms overall.
3.	A type of market structure where neither the firm nor the buyer can affect the selling price.
4.	A period of time where all inputs are variable.
5.	A period of time where there is at least one fixed input.

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