Graded Quiz Unit 6.docx - Graded Quiz Unit 6 14 May 20 May...

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Graded Quiz Unit 6 14 May - 20 May Question 1 The market for plumbing services in a city can be characterized by the model of monopolistic competition. Suppose that the market is initially in long-run equilibrium, and then there is an increase in demand for plumbing services. We expect that in the long run: Select one: a. firms will leave the plumbing market. b. there will be a short-run increase in the number of firms, but then the number will return to the original level. c. new firms will enter the plumbing market. Correct d. firms will shut down, but they will not leave the industry. Feedback The correct answer is: new firms will enter the plumbing market .
Question 2 If the CPI is 120 in 2005 and 150 in 2006, what is the rate of inflation over this period? Select one:
Question 3 The XYZ Company is a profit-maximizing firm with a monopoly in the production of pennants. The firm sells its pennants for $10 each. We can conclude that the XYZ Company is producing a level of output at which:
a. average total cost equals $10. b. average total cost is greater than $10. c. marginal revenue equals $10. d. marginal cost equals marginal revenue. Correct Feedback The correct answer is: marginal cost equals marginal revenue . Question 4 A statement that best reflects an evaluation of monopoly firms is that: Select one:

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