1.(Exhibit: Short-Run Costs) At the given price, the most profitable level of ou

Question

1.(Exhibit: Short-Run Costs) At the given price, the most profitable level of output occurs at quantity:

D.T

2. (Exhibit: Short-Run Costs) If the price declines, the minimum quantity of output supplied in the short run is quantity:

D.S.

3. (Exhibit: Short-Run Costs) If the price declines, production will continue in the short run, even though the firm incurs a loss, between quantities:

D.S and T.

4. (Exhibit: Short-Run Costs) This firm's supply curve begins at quantity:

D.T.

5. (Exhibit: Profit Maximization in Monopolistic Competition) A firm in monopolistic competition will maximize profits by producing the level of output where:

D.price minus ATC (i.e., economic profit per unit) is the largest.

6. (Exhibit: Profit Maximization in Monopolistic Competition) In the short run, a firm in monopolistic competition may experience economic profits as shown in Panel (a) as the distance:

D.PT times the quantity Q.

7. (Exhibit: Profit Maximization in Monopolistic Competition) If other firms see economic profits in the industry, they will enter it, and the demand curve for firms already in the industry will shift to the ________ ; in the long run, this will result in economic profit _______ and price _______ .

D.left; = 0; = ATC; > minimum ATC

8. (Exhibit: Profit Maximization in Monopolistic Competition) In monopolistic competition, long-run equilibrium is characterized by:

D.profit maximization, which occurs where P = MR = MC.

9. (Exhibit: Profit Maximization in Monopolistic Competition) In Panel (a), if the firm raises its price above P, it will:

D.have none of the above occur.

10. (Exhibit: Profit Maximization in Monopolistic Competition) In determining the price in monopolistic competition:

D.A and B are true.

Explanation / Answer

1. C. S
2. B. Q
3. B. Q and R
4. A. Q
5. B. MR = MC
6. C. PS times quantity Q
7. D.left; = 0; = ATC; > minimum ATC
8. A.P > MR
9. B.still have some customers.
10. C.the firm applies the marginal decision rule.

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