By shutting down when price is less than average variable cost at the profit-maximizing level of output, a perfectly competitive firm will limit its losses to its:

A) total variable costs.

B) total costs.

C) total fixed costs.

D) marginal costs.

Answer:

9) Assume that goods X and Y are substitutes and are produced in perfectly competitive markets. All else constant, in the short run, a decrease in the supply of good X would cause:

A) an increase in the demand for good Y.

B) a decrease in the demand for good Y.

C) an increase in the supply of good Y.

D) a decrease in supply of good Y.

Answer:

10) Industry X, which is perfectly competitive, is in long-run equilibrium. Assume a new law is passed that requires employers in industry X to provide health insurance to previously uninsured employees. As a result of this new requirement we would expect to observe:

A) a decrease in price and an increase in total output in industry X.

B) a decrease in price and total output in industry X.

C) an increase in price and a decrease in total output in industry X.

D) an increase in price and total output in industry X.

Answer:

11) All of the following are possible characteristics of a monopoly except:

A) there is a single firm.

B) the firm is a price taker.

C) the firm produces a unique product.

D) the existence of some advertising.