1. A perfectly competitive industry's market price is found by Select one:
a. locating the intersection of the market demand and market supply curves.
b. the horizontal summation of all the industry firms' individual supply curves.
c. identifying the price at which each firm realizes its largest economic profit.
d. finding the point on the market demand curve where the largest number of units will be purchased.
2. Suppose the price of an item in a perfectly competitive market is $3. For a firm in this market, MC = MR at an output of 100 units. The average total cost at this output level is $4 per unit, and TVC is $80. We may conclude that
a. the firm should shut down because other firms will enter the industry as the market is perfectly competitive.
b. the firm should continue to produce because P > AVC.
c. the firm should shut down because TC > TR.
d. the firm should shut down because its TFC is $320 and its TC is $400.