In the long run, a firm in monopolistic competition will :

In the long run, a firm in monopolistic competition will
 
  A) make a negative economic profit, that is, an economic loss.
  B) make zero economic profit, that is, a normal profit.
  C) make a positive economic profit.
  D) None of the above answers is necessarily correct because the amount of the profit or loss depends on the slope of the demand curve.

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Ques. 2

The above table gives some cost data for Peter's Pickles. Peter's fixed cost is 20. The average total cost (ATC) when 5 barrels of pickles are produced is
 
  A) 22.
  B) 26.
  C) 35.
  D) There is not enough information to answer the question.

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Ques. 3

Rather than prohibiting a good or service, the government might tax it. Imposing such a tax on a good or service ________ the equilibrium price and ________ the equilibrium quantity.
 
  A) raises; increases
  B) raises; decreases
  C) lowers; increases
  D) lowers; decreases

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Ques. 4

Lifetime income is distributed
 
  A) less equally than annual income and less equally than measured wealth.
  B) less equally than annual income and more equally than measured wealth.
  C) more equally than annual income and less equally than measured wealth.
  D) more equally than annual income and more equally than measured wealth.

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Ques. 5

In an unregulated market for healthcare, there is
 
  A) a deadweight loss from over-providing healthcare.
  B) a deadweight loss from under-providing healthcare.
  C) no deadweight loss.
  D) Any of the above could be correcting depending on how the marginal cost paid by producers compares to the marginal social cost.

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Ques. 6

A tax equal to the external marginal cost of an activity yields the efficient level of production because the tax
 
  A) achieves the competitive equilibrium.
  B) forces producers to face all costs of production including the external cost.
  C) ensures greater profits for the firm.
  D) eliminates all pollution.