1. Suppose Wave detergent is sold in a monopolistically competitive market. If the price of Wave detergent is currently $6 and the ATC is $4, in the long-run we expect
a. The demand curve for Wave to shift to the left
b The producers of Wave to go out of business
c The producers of wave to earn economic profits greater than zero.
2. If average total cost > average variable cost > price, a profit maximizing firm in a perfectly competitive market should:
a. Shut down in the short run
b. Increase its output level to minimize it's loss
c. None of these
3. If the government limits the number of firms in a market by issuing a limited number of licenses, the market structure is most likely to be
a. Perfectly competitive market
b. Monopoly
c. Oligopoly
4. Which of the market structures are most fair to society?
a. Monopoly
b.Oligopoly
c. Perfect competition