Question : The fixed cost of producing 500 units of Good Y : 1377532

The fixed cost of producing 500 units of Good Y is $25,000 while the variable cost of producing 500 units of Good Y is $60,000.

30) Refer to the scenario above. If the market for Good Y is monopolistically competitive, a firm producing Good Y will shut down production in the short run if price falls below ________.

A) $60

B) $200

C) $120

D) $50

31) Refer to the scenario above. Which of the following will happen if the equilibrium price charged by the firm in the short run is $130?

A) The firm will earn a positive economic profit and continue production.

B) The firm will incur a loss but continue production.

C) New firms will enter the industry in the long run.

D) All firms will incur losses in the long run.

32) Refer to the scenario above. If the equilibrium price charged by the firm in the short run is $170, the firm will earn ________.

A) a profit of $10 per unit

B) a profit of $25 per unit

C) a profit of $0 per unit

D) a profit of $30 per unit

33) Refer to the scenario above. A firm producing Good Y will ________.

A) earn economic profit if it charges a price of 120

B) incur losses if it charges a price of $200

C) earn zero economic profit if it charges a price of $170

D) shut down production if price falls below $200

34) Refer to the scenario above. A firm producing Good Y will continue production in the short run if total revenue exceeds ________.

A) $25,000

B) $60,000

C) $85,000

D) $35,000

35) Which of the following will happen if some firms in a monopolistically competitive market incur losses in the short run and the market conditions are not expected to change?

A) The existing firms will continue production in the long run.

B) The demand for the goods produced by the firms will decrease.

C) New firms will enter the industry in the long run.

D) Some firms will exit the industry in the long run.

36) A monopolistic competitor exits the industry in the long run if ________.

A) total revenue exceeds total cost

B) total costs exceed total revenue

C) marginal revenue exceeds marginal cost

D) marginal revenue equals marginal cost

37) New firms enter a monopolistically competitive market structure in the long run if the price charged by the existing firms in the short run ________.

A) exceeds the average total cost of production

B) equals the average fixed cost of production

C) equals the average variable cost of production

D) equals the price charged in a perfectly competitive market

38) If new firms enter a monopolistically competitive market structure in the long run, ________.

A) the demand curves faced by the existing firms shift to the right

B) the demand curves faced by the existing firms become perfectly inelastic

C) the demand curves faced by the existing firms become more elastic

D) the supply curves of the existing firms become relatively more elastic

39) Refer to the scenario above. How will the demand for pens faced by the existing pen manufacturers in Eduland be affected if new firms enter the industry in the long run?

A) The demand faced by the existing firms will become perfectly inelastic.

B) The demand faced by the existing firms will become perfectly elastic.

C) The demand faced by the existing firms will increase.

D) The demand faced by the existing firms will decrease.

40) Refer to the scenario above. How will the demand for pens faced by the existing pen manufacturers in Eduland be affected if several firms exit the industry in the long run?

A) The demand curve by existing firms will become perfectly inelastic.

B) The demand curve by existing firms will become perfectly elastic.

C) The demand faced by existing firms will increase.

D) The demand faced by existing firms will decrease.