Suppose that the graph below represents the market situation for a firm under monopolistic competition. What would each curve represent? Cost and Price ($) Quantity O A is average total cost, B is marginal revenue, C is marginal cost, and D is demand O A is marginal cost, B is average total cost, C is marginal revenue, D is demand O A is average total cost, B is average variable cost, C is marginal revenue, D is demand O A is average variable cost, B is demand, C is marginal revenue, D is marginal cost O A is marginal cost, B is average total cost, C is demand, and D is marginal revenue D Question 2 1 pts Is the monopolistically competitive firm in the graph below operating at the long run equilibrium? Cost and Price ($) Quantity O No, the firm is not at long run equilibrium because the firm is earning a loss O No, the firm is not at long run equilibrium because the firm is earning zero economic profit Yes, the firm is at long run equilibrium because there are zero economic profit O Yes, the firm is operating at long run equilibrium because the firm is earning positive economic profit O Yes, the firm is at long run equilibrium because social welfare is maximizedSuppose the table below represents the payoff matrix for two firms in duopoly, who are "noncooperative." Which one of the following statements is true? Firm B Firm B Advertise No Advertising Low profit High profit Firm A Advertise Low profit Loss Firm A No Loss Moderate profit Advertising High profit Moderate profit O Choosing to advertise would make Firm A better off, regardless of what Firm B does, than would choosing not to advertise. Firm A will choose to advertise because it guarantees a high profit. Choosing not to advertise would make Firm B better off, regardless of what Firm A does, than would choosing to advertise. O If both firms choose the same strategy they will both earn a loss. O The firms will collude. Question 4 1 pts The payoff matrix below describes advertising strategies and payoffs for two firms. If Firm A decides to advertise, what is the best outcome for Firm B? Firm B Firm B Advertise No Advertising Low profit High profit Firm A Advertise Low profit Loss No Loss Moderate profit Firm A Advertising High profit Moderate profit A loss associated with no advertising A low profit associated with advertising A moderate profit associated with no advertising O A high profit associated with advertising O There is not enough information to answer the question Question 5 1 pts Suppose the table below represents the payoff matrix for two firms in duopoly, who are 'noncooperative." Which of the following is true? Firm B Firm B Advertise No Advertising Low profit High profit Firm A Advertise Low profit Loss No Loss Firm A Moderate profit Advertising High profit Moderate profit O Firm A will choose to advertise and Firm B will choose not to advertise. Firm a will choose not to advertise and Firm B will choose to advertise. O Both firms will choose to advertise. None of these. O Both firms will choose not to advertise.Consumer sovereignty means that O consumers' purchasing decisions are a trial-and-error process. O consumers have perfect information about alternatives. O consumers' needs and wants determine the shape of all economic activities. O consumers are motivated to maximize their utility. O consumers are significantly influenced by their reference groups. Question 2 1pts Economics has traditionally assumed that a consumer's problem is to maximize their O utility. O social status. O profit. O consumption. O market share. Question 3 1 pts Fernando loved his first slice of cake, he enjoyed his second slice of cake, and he felt a bit sick after his third slice of cake. This description illustrates the concept of O the paradox of choice. O aconsumer society. O abudget line. O consumer sovereignty. A How will an increase in a consumer's income change her budget line? (O The budget line will not change. O The budget line will shift inward. (O The budget line will rotate away from the origin. (O The budget line will shift outward. O The budget line will rotate toward the origin. Question 5 1 pts Which one of the following is not a characteristic of the standard consumer model? O It takes into consideration the historical and social nature of consumption. O The assumption that people are rational. O The implicit assumption that predicted and remembered utility match relatively closely. (O The assumption that people's choices are constrained by their budget. (O The assumption that all the benefits from consumption can be identified, compared, and added up