a. $2 and 200 bushelsb. $2 and 200,000 bushelsc. $2,000 and 200,000 bushelsd. $2,000 and

a. $2 and 200 bushels

b. $2 and 200,000 bushels

c. $2,000 and 200,000 bushels

d. $2,000 and

1,000 bushels

2) A perfectly competitive firm earns an economic profit in the short run if price is ________.

a. equal to marginal cost

b. equal to average cost

c. greater than average total cost

d. greater than marginal cost

3) In part, perfect competition arises if ________.

a. each firm's minimum efficient scale is large relative to demand

b. each firm produces a good or service identical to those produced by its competitors

c. there are significant barriers to entry

d. there are more firms than barriers to entry

4) Under which circumstances will a profit-maximizing perfectly competitive firm shut down in the short run?

a. when it is earning a normal profit

b. whenever its marginal cost is less than its marginal revenue

c. when the price is less than its minimum average variable cost

d. whenever its total cost is greater than its total revenue

5) When the long-run average cost curve is downward-sloping, ________.

a. economies of scale are present

b. diseconomies of scale are present

c. the firm experiences constant returns to scale

d. the average fixed-cost curve must be upward-sloping