Exam2_W09_v1

Exam2_W09_v1 - NAME: _ Section:_ PART I - MULTIPLE CHOICE...

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NAME: ________________________________ Section:__________________ PART I - MULTIPLE CHOICE PROBLEMS Read each of the following questions carefully and circle the letter of the one best answer . Note that diagrams are often helpful in determining the correct answer. 1) At present output levels, a perfectly competitive firm is profit maximizing and producing 2000 units of output, selling for $2 each. Fixed costs are $2000, as are total variable costs. This firm should A) shut down immediately B) shut down in the long run C) stay in business D) unable to determine due to insufficient information 2) and 3) Initially, a perfectly competitive, increasing cost industry, is in long run equilibrium. The industry demand curve shifts left and remains permanently at the new position. 2) In the short-run industry equilibrium following this decrease in demand A) both price and quantity are higher than they were initially. B) both price and quantity are lower than they were initially. C) price is higher than it was initially, but the quantity sold is lower. D) price is lower than it was initially, and the quantity sold is higher. 3) When long-run industry equilibrium is restored following this decrease in demand A) both price and quantity are higher than they were initially. B) both price and quantity are lower than they were initially. C) price is higher than it was initially, but the quantity sold is lower. D) price is lower than it was initially, and the quantity sold is higher.
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Exam2_W09_v1 - NAME: _ Section:_ PART I - MULTIPLE CHOICE...

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